Suppose you intend to own or lease a vehicle for 42 months. Consider the following three...

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Suppose you intend to own or lease a vehicle for 42 months. Consider the following three options of financing the vehicle. Option A Purchase the vehicle at the normal price of RM32,508, and pay for the vehicle over 42 months with equal monthly payments at 6% per year Option B Purchase the vehicle at a discount price of RM31,020 to be paid immediately Option C Lease the vehicle for 42 months Item Price Down payment Interest Rate Period, months Table: Summary of Vehicle Financing Options Debt Paying Financing Cash 32,508 32,508 4,500 P Fees Cash due at the end of lease Purchase option at end of lease Cash due at signing 6% per year 42. 4,500 31,200 Lease Financing 32,508 42 (-) 994. P (-)395 F (+17,81724 (-) 1,508 1,308 For the lease option, the lessee must come up with RM1,508 at signing. This cash due at signing consists of the first month's lease payment of RM514 and RM994 administrative fee. A RM395 disposition fee is due at the end of the lease, at which time the lessee has the option to purchase the car for RM17, 817. If the funds that would be used to purchase the vehicle are presently earning 5% annual interest compounded monthly, evaluate which financing option is better choice. Suppose you intend to own or lease a vehicle for 42 months. Consider the following three options of financing the vehicle. Option A Purchase the vehicle at the normal price of RM32,508, and pay for the vehicle over 42 months with equal monthly payments at 6% per year Option B Purchase the vehicle at a discount price of RM31,020 to be paid immediately Option C Lease the vehicle for 42 months Item Price Down payment Interest Rate Period, months Table: Summary of Vehicle Financing Options Debt Paying Financing Cash 32,508 32,508 4,500 P Fees Cash due at the end of lease Purchase option at end of lease Cash due at signing 6% per year 42. 4,500 31,200 Lease Financing 32,508 42 (-) 994. P (-)395 F (+17,81724 (-) 1,508 1,308 For the lease option, the lessee must come up with RM1,508 at signing. This cash due at signing consists of the first month's lease payment of RM514 and RM994 administrative fee. A RM395 disposition fee is due at the end of the lease, at which time the lessee has the option to purchase the car for RM17, 817. If the funds that would be used to purchase the vehicle are presently earning 5% annual interest compounded monthly, evaluate which financing option is better choice.

Answer rating: 100% (QA)

The question seems to be asking to evaluate which financing option is better if the funds to purchase the vehicle are currently earning 5 annual interest compounded monthly Youre given three options O... View the full answer