Honda is offering to its top credit customers a lease on its new CR-V EX-L 2024 model priced at $33,175 with lease payments of $498 at the start of each month for 36 months with $2500 down payment and an option to buy the vehicle at $15,000 after the lease period. If the lease financing is at 3.6% APR, how much would you have paid as total amount of $ (to nearest $) by the end of lease.

Hint:

To calculate the total amount paid by the end of the lease, we need to consider the monthly lease payments, the down payment, and any additional costs. You are given the following information:

Vehicle price = $33,175

Monthly lease payment = $498

Down payment = $2,500

Lease term (t) = 36 months

Residual value (option to buy the vehicle after the lease) = $15,000 APR = 3.6%

Calculate the total cost of the monthly lease payments using the annuity payment formula:

Monthly lease payment= PMT x t

Where:

PMT is the monthly lease payment

T is the total number of payments (lease term)

Total amount you will pay be end of lease term = down payment + monthly lease payments + residual value = $2500 + $498 * 36 + $15,000

Evaluate the offer in terms of what you have learnt about time value of money. Contextualize and explain your results.

Answer rating: 100% (QA)

To calculate the total amount paid by the end of the lease we need to consider the monthly lease payments the down payment and any additional costs Gi... View the full answer