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THIS IS A VEHICLE FINANCE. 1.6

Assignment 5.1: Financing a New Vehicle (continued) 6. The selling price of a two-door sedan is $14 500 plus tax. The monthly lease payment is $203.79 a month plus taxes for a term of 60 months. A down payment of $2175 is required. Financing a loan for the sedan is at 8 %. The guaranteed residual value is 58% of the selling price before taxes. a) Calculate the total cost of leasing the sedan. (2 marks) b) Calculate the total cost of the sedan if it is purchased outright at the end of the lease. (2 marks) c) Calculate the total cost of the sedan if it is purchased with financing at the end of the lease. The residual value is financed with a five-year loan. (2 marks) d) Calculate the finance charge of the loan to pay for the residual value of the sedan. (1 mark) continued Assignment 5.1: Financing a New Vehicle (continued) 6. The selling price of a two-door sedan is $14 500 plus tax. The monthly lease payment is $203.79 a month plus taxes for a term of 60 months. A down payment of $2175 is required. Financing a loan for the sedan is at 8 %. The guaranteed residual value is 58% of the selling price before taxes. a) Calculate the total cost of leasing the sedan. (2 marks) b) Calculate the total cost of the sedan if it is purchased outright at the end of the lease. (2 marks) c) Calculate the total cost of the sedan if it is purchased with financing at the end of the lease. The residual value is financed with a five-year loan. (2 marks) d) Calculate the finance charge of the loan to pay for the residual value of the sedan. (1 mark) continued

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