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Page history last edited by PBworks 17 years, 11 months ago

Learning Objectives


Problem 1 of 3


Emily wishes to obtain a new car with a total price of $18 752.


Option 1: Purchase the car now with a down payment of $4000 and a loan at 2% per annum compounded monthly and paid monthly for 3 years.

Option 2: Lease the car with no down payment and pay $325 per month for 3 years and then purchase the car outright at its lease-end value of $8000.


(a) What is the monthly payment for Option 1?


(b) What is the total paid in Option 2?


(c) Which option will cost Emily the least amount and by how much?






A= P(1+i)^t


--p= principal. amount to begin with.

--A= amount paid at the end.

--t= time in years


Option 1 a) =18 752(1+.02)^3

=18 752(1.02)^3




option one montly pay=$19899.77/36





Option 2 b) 325*36=$11700.00+8000 12*3=36



          • Option 2 will cost Emily the least amount. by: $23899.77-19700.00



Next Problem


Personal Finanace

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