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Savings: [tex]$\$[/tex] 2,500[tex]$
Discretionary spending: $[/tex]\[tex]$ 450$[/tex] per month

\begin{tabular}{|l|l|l|}
\hline
& \multicolumn{1}{|c|}{\begin{tabular}{c}
Option A \\
Buy
\end{tabular}}
& \multicolumn{1}{|c|}{\begin{tabular}{c}
Option B \\
Lease
\end{tabular}} \\
\hline
Total cost & [tex]$\$[/tex] 20,579[tex]$ & $[/tex]\[tex]$ 12,169$[/tex] \\
\hline
Up-front cost & [tex]$\$[/tex] 2,500[tex]$ & $[/tex]\[tex]$ 3,925$[/tex] \\
\hline
\begin{tabular}{l}
Monthly \\
payment
\end{tabular}
& \begin{tabular}{l}
\[tex]$338 for 60 \\
months
\end{tabular}
& \begin{tabular}{l}
\$[/tex]229 for 36 \\
months
\end{tabular} \\
\hline
\begin{tabular}{l}
Mileage \\
restriction
\end{tabular}
& None
& \begin{tabular}{l}
10,000 per \\
year
\end{tabular} \\
\hline
\end{tabular}

What are the disadvantages of choosing the lease? Check all that apply.

A. I do not have enough money for the down payment.
B. I must make sure not to drive more than 10,000 miles a year.
C. I will pay a higher price for the car.
D. My monthly payments will be higher.
E. I will have to buy another car in three years.



Answer :

GinnyAnswer
Let's analyze the disadvantages of choosing the lease option based on the given information:

1. I do not have enough money for the down payment.

- The up-front cost for leasing is \[tex]$3,925. - Your savings are \$[/tex]2,500.
- Since the up-front cost is more than your savings, you do not have enough money for the down payment.

2. I must make sure not to drive more than 10,000 miles a year.

- The lease option comes with a mileage restriction of 10,000 miles per year.
- This is a limitation if you drive more than 10,000 miles annually.

3. I will pay a higher price for the car.

- The total cost of buying is \[tex]$20,579. - The total cost of leasing is \$[/tex]12,169.
- Leasing usually costs less overall, so this is not a valid disadvantage.

4. My monthly payments will be higher.

- The monthly payment for buying is \[tex]$338 for 60 months. - The monthly payment for leasing is \$[/tex]229 for 36 months.
- Since the lease monthly payment is lower, this is not a valid disadvantage.

5. I will have to buy another car in three years.

- The lease duration is 3 years (36 months).
- After the lease period ends, you will need to either lease another car or buy one.

Thus, the disadvantages of choosing the lease are:

1. I do not have enough money for the down payment.
2. I must make sure not to drive more than 10,000 miles a year.
5. I will have to buy another car in three years.

So, the final disadvantages are: [1, 2, 5]

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