1. You must decide whether to buy a new car for $20,000 or lease the same car over a 3-year period. Under the terms of the lease, you make a down payment of $2000 and have monthly payments od $200. At the end of the 3 years, the leased car has a residual value ( the amount you pay if you choose to buy the car at the end of the lease period) of $10,000. Assume you sell the car at the end of the 3 years at the same residual value. Compare the cost of leasing and buying the car
Buy $11,000, lease $9200
Buy $10,000, lease $890
Buy $10,000, lease $9200
Buy $10,000, leae $9400
2. Many insurance companies carry a deductible provision that states how much of a claim you must pay out of pocket before the insurance company pays the remainin expenses. Suppose you have a car insurance policy with a $900 deductible provision (per claim) for collisions. During a 2-year period, you file claims for $550 and $1325. The annuanl premium for the policy is $400. Determine how much you would pay with and without the insurance policy
with policy $1775, w/o $2225
w/p $2600, w/o $1875
w/p $1850, w/o $1875
w/p $2250, w/o $1875