|Interest rate||INTEREST_RATE||Interest rate||LEASE_INTEREST|
|Down payment||DOWN_PAYMENT||Down payment||DOWN_PAYMENT|
|Other fees buy||OTHER_FEES_BUY||Other fees lease||OTHER_FEES_LEASE|
|Rate of depreciation||RATE_OF_DEPRECIATION||Residual percent||RESIDUAL_PERCENT|
|Sales tax||SALES_TAX||Security deposit||SECURITY_DEPOSIT|
|Loan payment||LOAN_PAYMENT||Lease payment||MONTHLY_PAYMENT|
|Net cost of buying||Net cost of leasing|
|Total loan payments||+ TOTAL_PAYMENTS||Total lease payments||+ TOTAL_LEASE_PAYMENTS|
|Lost interest on buy option||+ LOST_INTEREST_ON_BUY||Lost interest on up front costs||+ LOST_INTEREST_ON_LEASE|
|Down payment||+ DOWN_PAYMENT||Up front costs||+ TOTAL_UPFRONT_COSTS|
|Ending loan balance||+ ENDING_LOAN_BALANCE|
|Market value after TERM months*||- MARKET_VALUE_AT_END_OF_LOAN|
|Net cost of purchase||= NET_COST_OF_PURCHASE||Net cost of lease||= NET_COST_OF_LEASE|
The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending Dec. 1st, 2014, had an annual compounded rate of return of 8.06%, including reinvestment of dividends. From January 1970 through to Dec. 2014, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.7% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that Separate Account investment funds and/or investment companies may charge.
The lost interest on your purchase includes any interest you would have earned at your investment rate of return on the buy option's down payment and other fees. If the monthly payment for leasing is less than the monthly payment for buying, this also includes any lost interest due to the higher monthly payments. If leasing is more expensive than buying, your interest costs for buying are reduced by the amount of interest you would earn on the difference.
The lost interest on your lease includes any interest you would have earned at your investment rate of return on the lease option's down payment, security deposit and other fees. Please see the definition for 'Net cost of buying' for an explanation on how we account for any interest you might earn by having a lower monthly lease payment.
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