You are deciding whether to buy a car for $18,500 or to accept a lease agreement. The lease entails a $1000 fee plus monthly payments of $230 for 48 months. Under the lease agreement, you are responsible for service on the car and insurance. At the end of the lease, you may purchase the car for $7000. Complete parts a through c below. a. Should the cost of service and insurance determine which option you choose? OA. Yes, because you probably don't have to pay for services when you buy the car. OB. Yes, because you get a discount on your insurance when you lease the car. OC. No, because it is cheaper to lease the car than to buy it. OD. No, because you will probably have to pay for service and insurance with either plan. b. Does the total cost of purchasing the car at the end of the lease agreement exceed the cost of purchasing the car at the outset? A. Yes, the total cost of the car at the end of the lease is $ OB. No, the total cost of the car at the end of the lease is $ c. What are some possible advantages of leasing the car? OA. Not all of the money is needed up front and you have years to decide if you want to buy the car. OB. You can sell the car whenever you want and you can make money on the car when you sell it. OC. You can give the car back whenever you want and you can get a new car whenever you want. D. The insurance costs less and you get a service discount.
You are deciding whether to buy a car for $18,500 or to accept a lease agreement. The lease entails a $1000 fee plus monthly payments of $230 for 48 months. Under the lease agreement, you are responsible for service on the car and insurance. At the end of the lease, you may purchase the car for $7000. Complete parts a through c below. a. Should the cost of service and insurance determine which option you choose? OA. Yes, because you probably don't have to pay for services when you buy the car. OB. Yes, because you get a discount on your insurance when you lease the car. OC. No, because it is cheaper to lease the car than to buy it. OD. No, because you will probably have to pay for service and insurance with either plan. b. Does the total cost of purchasing the car at the end of the lease agreement exceed the cost of purchasing the car at the outset? A. Yes, the total cost of the car at the end of the lease is $ OB. No, the total cost of the car at the end of the lease is $ c. What are some possible advantages of leasing the car? OA. Not all of the money is needed up front and you have years to decide if you want to buy the car. OB. You can sell the car whenever you want and you can make money on the car when you sell it. OC. You can give the car back whenever you want and you can get a new car whenever you want. D. The insurance costs less and you get a service discount.
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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Transcribed Image Text:You are deciding whether to buy a car for $18,500 or to accept a lease agreement. The lease
entails a $1000 fee plus monthly payments of $230 for 48 months. Under the lease agreement,
you are responsible for service on the car and insurance. At the end of the lease, you may
purchase the car for $7000. Complete parts a through c below.
a. Should the cost of service and insurance determine which option you choose?
OA. Yes, because you probably don't have to pay for services when you buy the car.
OB. Yes, because you get a discount on your insurance when you lease the car.
OC. No, because it is cheaper to lease the car than to buy it.
OD. No, because you will probably have to pay for service and insurance with either plan.
b. Does the total cost of purchasing the car at the end of the lease agreement exceed the cost of
purchasing the car at the outset?
A. Yes, the total cost of the car at the end of the lease is $
OB. No, the total cost of the car at the end of the lease is $
c. What are some possible advantages of leasing the car?
OA. Not all of the money is needed up front and you have years to decide if you want to buy
the car.
OB. You can sell the car whenever you want and you can make money on the car when you
sell it.
OC. You can give the car back whenever you want and you can get a new car whenever you
want.
D. The insurance costs less and you get a service discount.
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