Problem:
The residual value of the car is estimated to be $13,650. The lease has no termination fees or charges. If you decide to purchase, your bank requires a down payment of $3,800 and will finance the balance with a 10.25% APR loan for 36 months. The sales tax in your state is 6.5%, and the tag and title charges are $75. The opportunity cost is the interest your down payment could have earned if you didn't purchasethe vehicle. Currently, your money earns 4.5% in a savings account. Leasing price $19,995 and $249 a month for 36 mos, no security deposit, $2,500 at signing plus tax,tag, and title.
Required:
Question 1: What is the total purchase price of the vehicle, including tax,tag, and title?
Question 2: What are the monthly payments on the loans?
Question 3: What is total cost of purchasing?
Question 4: What is total cost of leasing?
Question 5: Explain which of these financing choices is better deal and why?
Note: Explain all steps comprehensively.