Biff can't decide whether to buy a car or lease it. He found a car that has a purchase price of $27500.00 plus taxes(1.12). If he wishes to buy it, he needs a down payment of $3600 and a four-year loan at 6% compounded monthly. If he chooses to lease the car he will have monthly payments of $375 plus taxes(1.12) for four years.
a) Calculate the cost of purchasing the vehicle over the 4-year period.
b) Calculate the cost of leasing the car for four years.
c) What is the purchase option price at the end of the lease?
d) Biff has two options at the end of the lease. He can buy the car for cash, or he can take out a two year loan at 7%/a compounded semi-annually to buy the car. State the costs of both options.
Can somebody help me for a and b? The answers should be fine.
a) Calculate the cost of purchasing the vehicle over the 4-year period.
b) Calculate the cost of leasing the car for four years.
c) What is the purchase option price at the end of the lease?
d) Biff has two options at the end of the lease. He can buy the car for cash, or he can take out a two year loan at 7%/a compounded semi-annually to buy the car. State the costs of both options.
Can somebody help me for a and b? The answers should be fine.