Rolling on Down the Road Assignment

Rolling on Down the Road Assignment

NAME: ______DATE: ______Period: ______

Rolling on Down the Road – Assignment

Purchasing a Car:

  1. Ms. Salinas is purchasing a new car from Courtesy Motors. The cost of the car she has decided to buy is $17,500. The sales tax on the automobiles is 3.25%. The title and license charges are $96.55. She is financing the purchase through her bank which requires 10% down on the total costs of her car. The loan will be at an interest rate of 6.25% compounded monthly. She wants to pay the car off in three years.
  1. What is the charge for sales tax?

Cost (Sales tax in decimal form) – Total Sales Tax

  1. What is the total cost of purchasing the new car?

Cost (Total Sales Tax) + title and license charges = Total Cost

  1. What is the amount of the down payment?

Total Cost (% of down payment in decimal form) = Down Payment

  1. What will be the loan amount?

Total Cost – Down Payment = Loan Amount

  1. Set up the equation using the Amortization Formula for Monthly Payment

M =

P =

r =

n =

t =

  1. Enter the data in the TVM Solver in the graphing calculator to verify. What is the monthly payment?

N =

I% =

PV =

PMT =

FV =

P/Y =

C/Y =

PMT: END BEGIN

Leasing a Car:

  1. Ms. Salinas also has the option to lease the care. The car salesperson has explained that a lease is an agreement in which she must make equal monthly payments for a specific period of time. At the end of the lease, she will not own the car but must return it to the dealership. At the end of the lease there will be an option to purchase the car at a predetermined price. It is possible that end-of lease fees and charges for excess mileage will be accessed at the end of the lease period.

Although the monthly payment on the lease is much cheaper than the loan purchase monthly payment, Ms. Salinas decides to investigate further.

  1. What is the total amount Ms. Salinas will pay to purchase the car? (Remember not to forget the down payment)
  1. If the car purchased depreciates $1,650 per year, what is the value of the car at the end of the loan?

Cost of Car - # of years (amount depreciated) = Value of Car

  1. What was the loss on the car?

Total Cost – Value of car = Loss on the Car

  1. What it the total cost of leasing the car?
  1. What is the loss on leasing the car?
  1. From Ms. Salinas’ investigations, do you think she will decide it is better to purchase or lease the car? Explain your reasoning in complete sentences.
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