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Case Study #1

Data:

Maxine negotiated the cost of a car and has asked you to help her decide whether she should lease or buy.

 

MSRP   $25,000
Negotiated cost/capitalized cost $22,000
Down payment  $2,000
Lease term and residual 3 years, 55%   
Fees:    Acquisition $500
Registration

$150
License

$35
Documentation

$200
Termination

$300
Rent charge and loan rate 8.35%
Sales tax 6.25%

 

 Calculations:

Help her decide based solely on costs. She will pay for the down payment, taxes on the down payment, and fees, but will finance the remainder (including other taxes). Assume that you can sell the purchased vehicle for the amount of the residual value at the end of the lease period.

 



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