Jan is trying to decide between two cars that will be leased. The interest rate on leases for both cars is 6.25% NAR with monthly compounding for a four year lease. The trade-in from her present car is $5,000 for both car options, that would be deducted from the price.
Car A is more expensive at $40,000 and has an estimated value of $15,000 when returned to the dealer at the end of the lease.
Car B has a negotiated price of $30,000 and has an estimated value of only $5,000 when returned to the dealer at the end of the lease.
If the down payment is deducted from the price, which offer would have the lowest payments?