MATH125: Logic, Decision Making, and Intro to Statistics - Car Lease

This assignment provides a detailed analysis of the decision-making process involved in buying versus leasing a car. It includes step-by-step calculations for determining loan amounts, interest rates, monthly payments, and total costs associated with both options. The analysis covers various scenarios, such as different interest rates, loan terms, and down payments, to illustrate the financial implications of each choice. Furthermore, the assignment identifies the advantages and disadvantages of buying and leasing, ultimately concluding with a recommendation against leasing based on a comprehensive cost comparison. Desklib provides access to similar assignments and study resources for students.

Running head: LOGIC, DECISION MAKING, AND INTRODUCTION TO STATISTICS
Logic, Decision Making, and Introduction to Statistics
Name of Student:
Name of University:
Author’s Note:

1LOGIC, DECISION MAKING, AND INTRODUCTION TO STATISTICS
Table of Contents
Answer to Buying Questions...........................................................................................................3
Answer to Part 1..............................................................................................................................3
Answer to Part 2..............................................................................................................................3
Answer to Part 3..............................................................................................................................3
Answer to Part 4..............................................................................................................................3
Answer to Part 5..............................................................................................................................3
Answer to Part 6..............................................................................................................................3
Answer to Part 7..............................................................................................................................4
Answer to Part 8..............................................................................................................................4
Answer to Leasing Questions..........................................................................................................4
Answer to Part 9..............................................................................................................................4
Answer to Part 10............................................................................................................................4
Answer to Part 11............................................................................................................................4
Answer to Part 12............................................................................................................................4
Answer to Part 13............................................................................................................................5
Answer to Part 14............................................................................................................................5
Answer to Part 15............................................................................................................................5
Answer to Part 16............................................................................................................................5
Answer to Part 17............................................................................................................................5
Answer to Part 18............................................................................................................................5
Bibliography....................................................................................................................................7

2LOGIC, DECISION MAKING, AND INTRODUCTION TO STATISTICS
Answer to Buying Questions
Answer to Part 1
I wish to own Honda Civic Coupe, the retail value of the car is $ 20940.
Answer to Part 2
As per 5/1 ARM layer variable the selected interest rate is 3.75%
Answer to Part 3
Time to pay off the loan amount is selected as 5year
Answer to Part 4
Total interest on loan = (20940x3.75x5)/100 = $ 3,926.25
Principal (P) $ 20,940.00
Rate [R] 3.75
Time (T) 5 Years
SI
(P xT x
R)/100
Total Interest on Loan (I) $ 3,926.25
Answer to Part 5
Total repayment to be done over the life of loan = $ 20,940.00 + $3,926.25 = $24,866.25
Amount (A) = $24,866.25
Answer to Part 6
Total monthly payment required to repay the loan amount = 24,866.25/ (5*12) = $ 414.44

3LOGIC, DECISION MAKING, AND INTRODUCTION TO STATISTICS
Answer to Part 7
New principal value = $24,866.25 - [20940 x 6%] = $23,609.85
Down payment @ 6% $ 1,256.40
New Principal Value $ 23,609.85
Answer to Part 8
New Monthly Payment needed = (24866.25-1256.40)/ (12x5) = $ 393.5
Answer to Leasing Questions
Answer to Part 9
The reduced interest rate is 5%-3% = 2%
Answer to Part 10
I wish to lease the car for 7 years
Answer to Part 11
The new value of P = 50% of $ 23,609.85 = $ 11804.925
Answer to Part 12
The total interest amount needed for paying the lease amount is (11804.93 x 7 x 2)/ 100 = $ 1653
Leasing
New Principal Value for
Leasing $ 11,804.93
Time for Lease 7
Rate of Interest 2
Interest Needed for Lease $ 1653

4LOGIC, DECISION MAKING, AND INTRODUCTION TO STATISTICS
Answer to Part 13
The total cost is computed as 11,804.93 + 1653 = $13,457.61
Answer to Part 14
Monthly Payment for Leasing is 13,457.61/ (12x5) = $ 224.29
Answer to Part 15
The main disadvantage at this stage is identified paying a monthly interest payment of $
414.44 rather than $ 224.29. Henceforth, the main disadvantage is seen with paying a higher
monthly payment for buying. However, this will also give the opportunity to buy the car by
paying a higher monthly price.
Answer to Part 16
P from step 11 = $ 11804.925
R from step 2 = 3.75%
T from step 3 = 5 years
Interest = (11804.925 x 3.75 x 5)/100 = $ 2213.42
Total Repayment needed = 11804.925/ (12*5) = $ 196.75
Answer to Part 17
Total cost of the car = 2213.42 + 11804.925 = $ 14018.345
Answer to Part 18
No, I would not consider leasing the car. Leasing is just having the possession for few
years. In addition to this, this will significantly cost more cost than the equivalent loan amount.
The lease contract is usually able to specify a limited number of miles. In case the vehicle is
maintained in a good condition then the excess needs to be paid on the excess mileage.

5LOGIC, DECISION MAKING, AND INTRODUCTION TO STATISTICS
However, in case of leasing decision is considered, the car will be driven in the most
trouble-free years. Moreover, it is possible to be manufacturer’s warranty in a better way which
may include free oil changes and other scheduled maintenance. It needs to be further understood
that there will be significant tax benefits in leasing which are not present in the decision to buy
the car (Consumer Reports 2018).

6LOGIC, DECISION MAKING, AND INTRODUCTION TO STATISTICS
Bibliography
Consumer Reports. (2018). Pros and Cons of Car Leasing. [online] Available at:
https://www.consumerreports.org/buying-a-car/pros-and-cons-of-car-leasing/ [Accessed 19 Feb.
2018].
Paradise, A., Preston, D.R. and Mercado, J.H., Intuit Inc, 2017. Systems and methods for
purchasing products from a retail establishment using a mobile device. U.S. Patent 9,747,631.
Chong, C. and Okubo, T.L., eBay Inc, 2015. Method, system, and medium of controlling a
visually perceptible output in relation to a virtual gift. U.S. Patent 9,092,819.
Cue, E., Kondrk, R., Gautier, P., Robbin, J.L. and Heller, D., Apple Inc, 2017. Method and
system for sharing playlists. U.S. Patent 9,715,500.
Shi, K., eBay Inc, 2016. Method, medium, and system for comparison shopping. U.S. Patent
9,262,784.
Cain, R.B., Hope, W., Von Busch, K. and DeGuiseppe, D.E., Experian Information Solutions
Inc, 2016. Methods and sytem for simultaneously generating vehicle history reports and
preapproved financing options. U.S. Patent Application 14/975,470.
Markarian, C. and Meyer auf der Heide, F., 2015, July. Online Resource Leasing.
In Proceedings of the 2015 ACM Symposium on Principles of Distributed Computing (pp. 343-
344). ACM.