Compare the cost of the following lesing agreement with the finance charge on a loan for the same time period. The price of the car is $14,000, and its projected residual value at the end of four years is $3,000. Monthly payment                      $250 Capital cost reduction            $1,000 Disposition charge                    $200

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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Compare the cost of the following lesing agreement with the finance charge on a loan for the same time period. The price of the car is $14,000, and its projected residual value at the end of four years is $3,000.

Monthly payment                      $250

Capital cost reduction            $1,000

Disposition charge                    $200

Other things being equal, one would want to finance this car rather than take this lease if the finance cost were less than

 

Select one:

a. $2,200

b. $2,000

c. $1,550

d. $1,450 

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