Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Please answer all parts of the question

Transcribed Image Text:1. Tyler is a contractor in Winnipeg and needs a new truck for his business. The
total purchase price is $59 300.45. He has $5000 saved for a down payment.
He needs to decide whether he should buy or lease his vehicle. When you
buy or lease a new vehicle you need to pay Federal and Provincial sales tax.
Buying Option:
O The loan for the purchase includes the taxes and must be repaid in 48
monthly payments of $1195.49 plus the down payment.
Leasing Option:
O There are 48 monthly payments of $720.25 plus taxes plus the down
payment.
O The purchase price at the end of the lease is $27 100.
a. What is the total cost to buy the truck?
b. What is the monthly lease payment including taxes?
c. What is the total cost to lease for 4 years?
d. What is the cost to buy the truck at the end of the lease?
e. How much will Tyler have spent in total if he buys the truck after the four
year lease?
f. What would you suggest Tyler do and why?
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