Question

Muriel is considering leasing a car, and she is even thinking about buying it after the lease is up. She's trying to make sense of the terms of the lease before she makes her decision, but she's having a little trouble figuring it all out. The terms of the lease are as follows.
Terms:
Length of lease: 32 months
MSRP of the car: $26,260
Purchase value of the car after lease: $14,330
Down payment: $1270
Security deposit: $605
Acquisition fee: $765
Lease factor: 0.00073
Provide Muriel with some assistance by answering the following questions. 5 points: Part I - 1 point; Part II - 1 point; Part III - 1 point; Part IV - 1 point; Part V - 1 point)
What is the amount of the cash due at signing?
What would be Muriel's monthly payment? What is the total amount of money that Muriel would spend on monthly payments? What is the total cost of leasing the car, assuming that Muriel does not get the security deposit back?
What is the total price of the car if Muriel buys it after leasing, assuming that she does not get the security deposit back

Answer 1

The amount of cash due based on the terms of the lease that Muriel will pay is $2640.

How to calculate the cash due?

The amount of cash due is calculated thus:

= Security deposit + Acquisition fee + Down payment

= $605 + $1270 + $765

= $2640

The monthly lease payment will be:

= Depreciation + Interest

= $133 + $28.7

= $161.70

Depreciation was calculated as:

= ($24990 - $14330) / 32 = $133

Interest was calculated as:

= Capitalized cost + Residual value × Money factor

= ($24990 + $14330) × 0.00073

= $28.70

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