Chapter 4.A, Problem 56E

Car leases. Consider the following three lease options for a new car. Determine which lease is least expensive, assuming you buy the car when the lease expires. The residual is the amount you pay if you choose to buy the car when the lease expires. Discuss other factors that might affect your decision.

• Plan A: $1000 down payment, $400 per month for two years, residual value=$10,000
• Plan B: $500 down payment, $250 per month for three years, residual value=$9500
• Plan C: $0 down payment, $175 per month for four years, residual value=$8000