Ben is considering purchasing a 2023 Toyota Highlander L for $39,832. The dealer is offering...
50.1K
Verified Solution
Link Copied!
Question
Accounting
Ben is considering purchasing a 2023 Toyota Highlander L for $39,832. The dealer is offering the following three options to own or lease the vehicle. If he normally changes his car every four years, which option would you recommend? Why?
Additional Information: Residual Value (Resale Value) =$19,120
(Note: Please exclude any personal property taxation and inflation from your calculations. The following concepts/calculations will be covered in detail in ECO/FIN 343 Fundamentals of Financial Planning course).
Option 1. Receive a $500 instant cash rebate from the MSRP and purchase the car outright in cash. Dealer fee and sales taxes will be $2,633.68.
Option 2. Finance the vehicle for 48 months at 4.99 % annual interest with a down payment of $3,953. Dealer fee and sales taxes will be $2,633.68. Option 3. Lease the vehicle for 48 months with a $656.11 monthly payment and $1,842.20 due at signing (with a 12,000 annual mileage limit).
1. What is the total cost of Option 1?
2. What is the monthly payment for Option 2?
2. What is the total cost of Option 2?
4. What is the total cost of Option 3?
5. Which option would you recommend based on the total cost of the car? Why?
6. Considering Option 3, what other factors should you consider?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
