Answer Happy

Question 3 (30 points) You are considering leasing a car. You notice an ad that says you can lease the car you want for $477.00 per month. The lease term is 60 months, with the first payment due at the inception of the lease. You must also make an additional down payment of $2,370. The ad also says that the residual value of the vehicle is $20,430. After much research, you have concluded that you could buy the car for a total driveout" price of $33,800. What is the quoted annual interest rate you will pay with the lease? Notice that in a car lease option, you will get the car at the beginning (t=0). At that time, the car was worth $33,800. You will return the car to the dealer after 60 months, not getting any payment back to you. The worth of the car at that time will be $ 20,430. Consider the interval 0.5%< k 2% for linear interpolation if you need to carry out an iterative process. You can also use your calculator if needed.