Mastering Quantitative Literacy: Car Leasing Costs Explained

If you can lease a car for $320 per month with a down payment of $500, how many months can you lease it before it equals the buying price of $18,740?

• A. 57 months
• B. 60 months
• C. 62 months
• D. 50 months

Answer: (A)

To determine how many months you can lease the car before the total cost equals the buying price of $18,740, you'll start by calculating the total cost of leasing the car. The monthly lease payment is $320, and you also have an initial down payment of $500. Therefore, the total cost of leasing the car for a certain number of months, \( x \), can be expressed as: Total Cost of Leasing = Down Payment + (Monthly Lease Payment × Number of Months) Total Cost of Leasing = $500 + ($320 × x) We want this total cost to equal the buying price, which is $18,740: $500 + ($320 × x) = $18,740 Next, we can subtract the down payment from both sides of the equation: $320 × x = $18,740 - $500 $320 × x = $18,240 Now, divide both sides by $320 to find \( x \): x = $18,240 ÷ $320 x = 57 Thus, you can lease the car for 57 months before the total cost equals the buying price of $18,740. This explains why the first option, which indicates 57 months,

When diving into the world of quantitative literacy, understanding financial decisions, especially car leasing, is crucial. After all, it’s not just about numbers; it’s about making choices that lead to financial freedom. So, let’s break it down using a relatable example about leasing a car. You ready to roll?

First off, imagine you have your eye on a fancy car. It’s shiny, it’s new, and it can be yours for a monthly lease payment of $320, with a down payment of $500 to get things started. Now, think about the total cost of leasing this vehicle compared to outright buying it for a price of $18,740. What would you choose? It’s a big decision, right?

To figure it out, we need to crunch some numbers. The total cost of leasing can be calculated using a straightforward formula:

[ \text{Total Cost of Leasing} = \text{Down Payment} + (\text{Monthly Lease Payment} \times \text{Number of Months}) ]

Plugging in our values, we get:

[ \text{Total Cost of Leasing} = 500 + (320 \times x) ]

Now, we want to find out how long we can lease it before that total moves past the buying price of $18,740. That means we set up the following equation:

[ 500 + (320 \times x) = 18,740 ]

Let’s tackle this step by step. First, subtract the down payment from both sides:

[ 320 \times x = 18,740 - 500 ]

This gives us:

[ 320 \times x = 18,240 ]

Next, we want to isolate ( x ) to figure out how many months we can lease the car. So, we divide both sides by 320:

[ x = \frac{18,240}{320} ]

Doing the math, we find:

[ x = 57 ]

Seems straightforward, right? So, if you lease this beautiful car with those terms, you’ll hit that buying price at 57 months. And that's it! This example illustrates not only how to solve similar problems, but it also highlights the importance of understanding leasing agreements in the bigger picture of financial literacy.

And let’s face it—whether you’re a college student calculating your potential expenses or anyone looking to make informed purchases, grasping these concepts can empower you. It’s not all just numbers; it’s about understanding your options and making the best financial decisions moving forward.

So, keep these calculations in mind, and as you prepare for your quantitative literacy exam, remember that each number you crunch is a step towards savvy financial insights. Who knew math could be this practical? You'll be ready to tackle similar questions in no time and impress yourself with how far you've come.