Question

Jennifer is looking to lease a car.  Bob’s Auto has a car available with a money factor of 0.00344.  AAA Auto has the exact same car available with a money factor of 0.00313.  Which of the following statements is true

b.
The lower money factor with AAA Auto will give Jennifer the lowest monthly payment is the correct answer

Answer 1

b.The lower money factor with AAA Auto will give Jennifer the lowest monthly payment

Explanation:

The money factor is a method used to calculate the economic repercutions, or economic cost that leasing a car would have on the person leasing the car, a higher money factor will represent a higher cost for the person leasing the car, so the cheapest option for Jenifer is the AAA company since the money factor is 0.00313 which is 0.00031 lower than the Bob´s Auto company.

Answer 2

Money factor is the Annual Percent Rate (APR) multiplied by 2400.

The higher the money factor the higher the APR.

That is why the statement given (The lower money factor with AAA Auto will give Jennifer the lowest monthly payment) is correct.