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Type: Open-Ended
Category: Money (USA)
Level: Grade 12
Author: jjstanley
Last Modified: 4 years ago

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Money (USA) Question

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Grade 12 Money (USA)

Mary needs a car for her business. She has chosen a car that costs $35,380.35 including all taxes and fees. She has two options:

She can lease the car for 4 years, for $398.22/month with a security deposit of $500 and delivery charge of $500.00.

She can purchase the car, making a downpayment of $2,000.00 and taking out a loan at an interest rate of 3.9% per annum, compounded monthly for a period of 4 years.

a. What is the cost of leasing the car if she returns it in good condition and receives her security deposit back?

b. What would be the monthly payment on the loan? (This loan payment should be treated as an annuity.)

c. What is the cost to purchase the car, including the interest on the loan?

d. Which option would you recommend? Explain.
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