Final answer:
The total cost of leasing the vehicle, excluding the security deposit (as it seems to be the expectation based on the answer choices), amounts to (C) $24,800 after including $24,000 from monthly payments and $800 from excess mileage charges.
Step-by-step explanation:
The student is asking about the total cost of leasing a vehicle for four years, which includes various fees and charges. To calculate the total cost, we must consider the initial security deposit, monthly lease payments, and additional charges for excess mileage.
- Initial Security Deposit: This is $1,000 and is withdrawn from a portfolio earning 9% per year. However, since the cost is based on the expense of leasing the vehicle, we treat the deposit as an expense without considering the potential earnings from the portfolio.
- Monthly Lease Payments: These payments are $500 per month. Over four years (48 months), the total cost would be 48 months × $500/month = $24,000.
- Excess Mileage Charge: The vehicle has a mileage restriction of 20,000 miles per year, but the student exceeded this by 8,000 miles over the lease term. At 10 cents per mile for excess mileage, the charge for excess mileage would be 8,000 miles × $0.10/mile = $800.
Adding these amounts together gives us the total cost of the lease: $1,000 (security deposit) + $24,000 (monthly payments) + $800 (excess mileage) = $25,800. However, this answer is not among the choices provided. Thus, it appears the student is not expected to include the security deposit in the total leasing cost. Therefore, we only add the monthly payments and the excess mileage charge: $24,000 (monthly payments) + $800 (excess mileage) = $24,800, which is option C.