Sam and Grace want to replace their 1998 pickup, which Sam drives for work They already own two vehicles, but they need to replace Sams truck because it has nearly 225,000 miles on the odometer The replacement must be a vehicle that fits his job as a self employed electrician Sam knows that he drives a lot on the job and is worried about the high mileage penalty on many leases, as well as the fees for excess vie wear and tear However, Grace is more concerned about the depreciation loss on a new truck purchase than the mileage penalty and would rather lease the new vehicle She also likes the idea of having a new, safer truck every few years without the hassles of resale Sam also does not like the fact that, if they lease, they would not own the vehicle hi will use for work Warranty protection to insure the truck remains in service is very important They feel that they can afford to spend $550 per month over 4 years for a new vehicle, as long as their associated expenses such as insurance, gas, and maintenance are not too high They also do not know where to start looking for a vehicle without the hassles of negotiating with dealership Identify SEVEN sources of vehicle purchasing information and the type of information available from each source From all the information available, what specific information about the different makes and models is the most relevant to Sam and Grace in making their purchasing decision What is the highest price they can pay on the new vehicle if they can afford a down payment of $4,000 Assume they finance their purchase for 48 months at 5 5 percent (Hint This is a present value of an annuity problem) According to the National Automotive Dealer Association (NADA) guide found at http www Nadaguides com are the couple better off to sell their pickup or use it as a trade in Consider both price and time in your answer If they decide to lease, what key factors are important in a good lease Explain to Grace and Sam the guidelines of leasing and whether or not its a smart financial move for them to consider would they better off with a closed end or an open end lease From a purely financial perspective, would you recommend leasing or financing Complete the attached Worksheet to substantiate your recommendation If Sam purchases a lemon, what alternatives are available to prevent the truck from shot circuiting his business

Question

Sam and Grace want to replace their 1998 pickup, which Sam drives for work  They already own two vehicles, but they need to replace Sams truck because it has nearly 225,000 miles on the odometer  The replacement must be a vehicle that fits his job as a self employed electrician  Sam knows that he drives a lot on the job and is worried about the high mileage penalty on many leases, as well as the fees for excess vie wear and tear  However, Grace is more concerned about the depreciation loss on a new truck purchase than the mileage penalty and would rather lease the new vehicle  She also likes the idea of having a new, safer truck every few years without the hassles of resale  Sam also does not like the fact that, if they lease, they would not own the vehicle hi will use for work  Warranty protection to insure the truck remains in service is very important  They feel that they can afford to spend $550 per month over 4 years for a new vehicle, as long as their associated expenses such as insurance, gas, and maintenance are not too high  They also do not know where to start looking for a vehicle without the hassles of negotiating with dealership  Identify SEVEN sources of vehicle purchasing information and the type of information available from each source From all the information available, what specific information about the different makes and models is the most relevant to Sam and Grace in making their purchasing decision  What is the highest price they can pay on the new vehicle if they can afford a down payment of $4,000  Assume they finance their purchase for 48 months at 5 5 percent  (Hint  This is a present value of an annuity problem) According to the National Automotive Dealer Association (NADA) guide found at http   www  Nadaguides com are the couple better off to sell their pickup or use it as a trade in  Consider both price and time in your answer If they decide to lease, what key factors are important in a good lease  Explain to Grace and Sam the guidelines of leasing and whether or not its a smart financial move for them to consider would they better off with a closed end or an open end lease  From a purely financial perspective, would you recommend leasing or financing  Complete the attached Worksheet to substantiate your recommendation  If Sam purchases a lemon, what alternatives are available to prevent the truck from shot circuiting his business

SolutionInn · Accepted Answer

The Answer is in the image, click to view ...

Question: Sam and Grace want to replace their 1998 pickup, which Sam drives for work. They already own two vehicles, but they need to replace Sams

Step by Step Solution

Students Have Also Explored These Related Finance Questions!