Answers26-27 Ignite Financial Literacy Personal Finance - EL3403Case Study: Personal Financial Planning

Case Study: Personal Financial Planning Answers

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1
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Compare the costs of buying and leasing a new vehicle.What are the advantages of buying the car? Check all that apply.

A
I have enough saved for the down payment.
B
There are no mileage restrictions.
C
The price of the car is less.
D
The monthly payment is less.
E
I will own the car in five years.
2
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7,140✔ 8,160 9,360

A
7,140
B
✔ 8,160
C
9,360
3

will✔ will not

A
will
B
✔ will not
27738

$225 $250✔ $275

Answers:
According to your research, you need to budgetfor insurance and gasoline if you choose to buy or lease the new car.:$275
If you choose to buy the used car, you need to budget for insurance and gas.:$225
27739

$200✔ $225 $250

A
$200
B
✔ $225
C
$250
27759

Question text not available

Answers:
You live 17 miles from work. You can expect to drive a minimum of miles per week.:170
You will work about 48 weeks per year, so you can expect to drive a minimum of miles per year.:8,160
You have a vacation planned and you expect to drive approximately 2,000 miles round trip. If you take the vacation, you stay under your mileage restriction if leasing.:will not
27760

What are the disadvantages of choosing the lease? Check all that apply.

A
I do not have enough money for the down payment.
B
I must make sure not to drive more than 10,000 miles a year.
C
I will pay a higher price for the car.
D
My monthly payments will be higher.
E
I will have to buy another car in three years.
27761

17 34✔ 170

Answers:
You live 17 miles from work. You can expect to drive a minimum of miles per week.:170
You will work about 48 weeks per year, so you can expect to drive a minimum of miles per year.:8,160
You have a vacation planned and you expect to drive approximately 2,000 miles round trip. If you take the vacation, you stay under your mileage restriction if leasing.:will not
27762

Based on your budget, which transportation option is the best financial decision for you? Explain your answer in at least two sentences.

Answer:

Option C, buying a used vehicle, is the best financial decision. It has the lowest up-front cost of $2,000 and the lowest combined monthly cost of $475 for the payment, insurance, and gas. Over 36 months, it would cost about $19,100, which is less than either new-car option.

27763

Which points did you include in your response? Check all that apply.

A
Option A is not the best choice, because the monthly payments will be too high.
B
Option B is not a good choice, because it requires too high of an up-front cost, and the mileage restriction might be a problem.
C
Option C is the best choice for my budget, and it will allow me to own a car outright once the loan is repaid.
27764

Your used car payment will be $250 per month. What financial challenge do you now face?

A
My auto insurance costs more than my renters insurance.
B
I will spend more on groceries now that I am buying gas.
C
My savings budget is too high.
D
My car payment is higher than my discretionary spending.
27765

You will need to revise your budget to account for a car payment.Which expense category would be the most difficult to change or reduce?

A
entertainment
B
rent
C
savings
D
groceries
27766

$225 $250✔ $275

Answers:
According to your research, you need to budgetfor insurance and gasoline if you choose to buy or lease the new car.:$275
If you choose to buy the used car, you need to budget for insurance and gas.:$225
27767

Compare the costs of buying and leasing a new vehicle.What are the advantages of buying the car? Check all that apply.

A
I have enough saved for the down payment.
B
There are no mileage restrictions.
C
The price of the car is less.
D
The monthly payment is less.
E
I will own the car in five years.
27768

What are the disadvantages of choosing the lease? Check all that apply.

A
I do not have enough money for the down payment.
B
I must make sure not to drive more than 10,000 miles a year.
C
I will pay a higher price for the car.
D
My monthly payments will be higher.
E
I will have to buy another car in three years.
27769

17 34✔ 170

Answers:
You live 17 miles from work. You can expect to drive a minimum of miles per week.:170
You will work about 48 weeks per year, so you can expect to drive a minimum of miles per year.:8,160
You have a vacation planned and you expect to drive approximately 2,000 miles round trip. If you take the vacation, you stay under your mileage restriction if leasing.:will not
27770

Your used car payment will be $250 per month. What financial challenge do you now face?

A
My auto insurance costs more than my renters insurance.
B
I will spend more on groceries now that I am buying gas.
C
My savings budget is too high.
D
My car payment is higher than my discretionary spending.
27771

You will need to revise your budget to account for a car payment.Which expense category would be the most difficult to change or reduce?

A
entertainment
B
rent
C
savings
D
groceries
27772

Based on your budget, which transportation option is the best financial decision for you? Explain your answer in at least two sentences.

Answer:

Option C, buying a used car, is the best financial decision based on the costs listed. It has the lowest up-front cost and the lowest combined monthly payment, insurance, and gas cost, so it costs less overall than the other options.

27773

$200✔ $225 $250

A
$200
B
✔ $225
C
$250

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