Using the following information, what is the cost to lease a car? • Security deposit $320 • Monthly lease payment $320 per month for a five - year lease • Opportunity cost of security deposit $320 * loan period (in years) * 2% interest • End-of-lease charges $520

A. $19,200.00

B. $19,784.00

C. $19,752.00

D. $20,072.00

E. $20,272.00

The answer is option (D) $20,072.00

Explanation:

The total cost to lease a car will involve all associated costs of leasing the car. This can be expressed as;

Total lease cost=security deposit+monthly lease payment+opportunity cost+end-of-lease charges

where;

security deposit=$320

monthly lease payment=$320

total lease payment=320*12*5=$19,200

opportunity cost=320*5*0.02=$32

end-of-lease charges=$520

replacing;

Total lease cost = (320+19,200+32+520) = $20,072.00

Cost to lease a car=$20,072.00