# C 10 LEASING VEHICLES_key_w2011

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```					AM 12
4-10                  LEASING VEHICLES           NAME:

EXAMPLE: There are two ways a vehicle can be purchased after three years: You can
purchase now and pay using a loan, or you can lease the car for three years and then
purchase it. Consider a car with a purchase price of \$20 000 plus taxes.

Option 1 Direct Purchase: There is a downpayment of \$5 000. GST is 7% and PST is
7.5%. The car is purchased with a loan of 1.5% p.a. compounded semi-annually and paid
monthly over three years. Determine the following:

a) The total cost of the car plus taxes

b) The amount borrowed

c) The monthly payment on the loan paid at the start of the month

N
I
PV
PMT
FV
PY
CY
END BEGIN

d) The total paid for the car, including the downpayment
AM 12
4-10                  LEASING VEHICLES           NAME:

EXAMPLE: There are two ways a vehicle can be purchased after three years: You can
purchase now and pay using a loan, or you can lease the car for three years and then
purchase it. Consider a car with a purchase price of \$20 000 plus taxes.

Option 1 Direct Purchase: There is a downpayment of \$5 000. GST is 7% and PST is
7.5%. The car is purchased with a loan of 1.5% p.a. compounded semi-annually and paid
monthly over three years. Determine the following:

e) The total cost of the car plus taxes

f) The amount borrowed

g) The monthly payment on the loan paid at the start of the month

N
I
PV
PMT
FV
PY
CY
END BEGIN

h) The total paid for the car, including the downpayment
Option 2 Lease to Purchase: There is a downpayment of \$1000. The lease payment is
\$280 per month plus taxes of 14.5%. After three years the car can be purchased for
\$10 500 plus taxes of 14.5%. Determine the following:

a) The monthly lease payment including taxes.

b) The total of the lease payments over the three years

c) The total paid for the car after purchase including the down payment.

What method of purchase is better?

Advantages and Disadvantages:

Assignment: Practice Booklet p. 91 – 92 # 3,4,5
Option 2 Lease to Purchase: There is a downpayment of \$1000. The lease payment is
\$280 per month plus taxes of 14.5%. After three years the car can be purchased for
\$10 500 plus taxes of 14.5%. Determine the following:

d) The monthly lease payment including taxes.

e) The total of the lease payments over the three years

f) The total paid for the car after purchase including the down payment.

What method of purchase is better?

Advantages and Disadvantages:

Assignment: Practice Booklet p. 91 – 92 # 3,4,5

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