Which lease will have the lowest expected cost

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Problem

Generally speaking, leasing a car is for rich people. Leasing is like renting, you don't own the car when the lease is up. But if you have the money, it does have some conveniences. See these articles if you wish to learn more: Mileage Limit and Buy vs. Lease. Let's say you've decided to lease a Mercedes AMG CLA 5 Coupe (who doesn't have that kind of money laying around). You've found the car you want at three dealerships (in Denver, Phoenix and LA) and here are the details. All leases are for 3 years (36 months); each lease has a mileage limit, which if you go over you pay an overage fee per mile exceeding the limit. You don't know how many miles that you're going to drive over the next three years, but based on the last few years, you guess that there is about an equal chance you'll drive 36k, 45k or 54k miles. Get the instant assignment help. According to expected value, which lease will have the lowest expected cost over the three year period with all costs included?

Reference no: EM133973136

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