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You must decide whether to buy a new car for $18,000 or lease the same car over a three-year period. Under the terms of the lease, you can make a down payment of $1000 and have monthly payments of $250. At the end of the three years, the leased car has a residual value (the amount you pay if you choose to buy the car at the end of the lease period) of $11,000. Assume you can sell the new car at the end of the three years at the same residual value Is it less expensive to buy or to lease? The cost for buying the car and selling it after three years

Respuesta :

Answer:

It is less expensive to buy a new car.

Step by step explanation:

New car costs: $18,000

To determine the costs of the lease:

[tex]\begin{gathered} \text{Lease}=(1,000+250(36\text{ months))+11,000} \\ \text{Lease}=(1,000+9,000)+11,000 \\ \text{Lease}=10,000+11,000 \\ \text{Lease}=21,000 \end{gathered}[/tex]

Therefore, it is less expensive to buy a new car.

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