Chris Sven son is trying to decide whether to lease or purchase a new car costing $18,000. If he leases, he'll have to pay a $600 security deposit and monthly payments of $425 over the 36-month term of the closed-end lease. On the other hand, if he buys the car then he'll have to make a $2,400 down payment and will finance the balance with a36-month loan requiring monthly payments of $515;
he'll also have to pay a 6 percent sales tax ($1,080) on the purchase price, and he expects the car to have a residual value of $6,500at the end of 3 years. Chris can earn 4 percent interest on his savings. Use the automobile lease versus purchase analysis form in Worksheet 5.1 to find the total cost of both the lease and the purchase and then recommend the best strategy for Chris.