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MATH 125 Regarding Buying and Leasing a Car Project Answer Form

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MATH125: Unit 3 Individual Project Answer Form
Logic, Decision Making, and Introduction to Statistics
ALL questions below regarding BUYING and LEASING a car must be answered. Show ALL step-by-step calculations,
round all of your final price answers correctly to the nearest cent, and include the units of measurement. Submit this
modified Answer Form in the Unit 3 IP Submissions area.
Being well-informed, or at least knowing the right questions to ask, can save you from being taken advantage of. The
purchase of a car involves so many variables that it is best to have some understanding before you attempt to purchase
a car. There are even more variables to consider when you lease a car. For the purpose of this example, you will ignore
such things as tax and dealer rebates. Research the differences between buying and leasing a car.
BUYING
1. Choose a car that you wish to own, and find the price of this car. For this example, only consider new cars to
purchase from a dealership. This will be your principal value, P.
Principal, P
$10000
2. Research available interest rates on this particular car. This will be the rate, r.
Rate in decimal form, r
5.5% per year
3. Decide how long you would like to take to pay off this car. Choose within 2 to 5 years. This will be the time, t.
Time, t
5 years
4. The simple interest formula, 𝐼 = 𝑃𝑟𝑡, can tell you how much interest will be added to the principal amount of
this loan. Calculate the interest on your loan.
Interest, I
$2750
Show your work here: we know simple interest (I) = Prt/100=(10000×5.5×5)/100= $2750
5. How much will you be repaying over the life of your loan?
Total repayment
$12750

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Show your work here: Total repayment = Principal (P) + Interest (I) = $(10000+2750)= $12750
6. How much are your monthly payments?
Monthly payments
$212.50
Show your work here: Monthly payments = Total repayment/Total months = $(12750/60) = $212.50
7. Assume that you have 6% to use as a down payment based on the original purchase price of the car. How much
will you be putting down? What is the new value of P on your lease?
Down payment, D
$600
New value, P
$9400
Show your work here: Down payment (D) = $(10000×6%) = $600 New value of P = old value of P- $600
= $10000-$600 = $9400
8. With the down payment, what will the new monthly payments be?
New monthly payment
$199.75
Show your work here: New value of P =$9400 New interest = $(9400×5.5×5)/100 = $2585 New value of total
repayment = $9400+ $2585 = $11985 So, new monthly payment = $(11985/60) = $199.75
LEASING
Now, consider the option to lease this same car.
9. The appeal of a lease is a lower interest rate. Subtract 3% from the original interest rate (from Step 2). If your
answer is less than 0.6%, use the minimum rate of 0.6%.
2.5 % per year

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NAME: MATH125: Unit 3 Individual Project Answer Form Logic, Decision Making, and Introduction to Statistics ALL questions below regarding BUYING and LEASING a car must be answered. Show ALL step-by-step calculations, round all of your final price answers correctly to the nearest cent, and include the units of measurement. Submit this modified Answer Form in the Unit 3 IP Submissions area. Being well-informed, or at least knowing the right questions to ask, can save you from being taken advantage of. The purchase of a car involves so many variables that it is best to have some understanding before you attempt to purchase a car. There are even more variables to consider when you lease a car. For the purpose of this example, you will ignore such things as tax and dealer rebates. Research the differences between buying and leasing a car. BUYING 1. Choose a car that you wish to own, and find the price of this car. For this example, only consider new cars to purchase from a dealership. This will be your principal value, P. Principal, P $10000 2. Research available interest rates on this particular car. This will be the rate, r. Rate in decimal form, r 5.5% per year 3. Decide how long you would like to take to pay off this car. Choose within 2 to 5 years. This will be the time, t. Time, t 5 years 4. The simple interest formula, 𝐼 = 𝑃𝑟𝑡, can tell you how much interest will be added to the principal amount of this loan. Calculate the interest on your loan. Interest, ...
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