Question
In: Finance
19. You are considering leasing a car. You notice an ad that says you can lease...
19. You are considering leasing a car. You notice an ad that says you can lease the car you want for $417.00 per month. The lease term is 60 months with the first payment due at inception of the lease. You must also make an additional down payment of $2,370. The ad also says that the residual value of the vehicle is $18,500. After much research, you have concluded that you could buy the car for a total "driveout"price of $35,800. What is the quoted annual interest rate you will pay with the lease? (please solve in excel and explain which pieces of information are relevant) :) Thank you!
Solutions
jeff jeffy answered 1 month agoRelated Solutions
You are considering whether to buy or lease a car. If you lease, you have to...
You are considering whether to buy or lease a car.
If you lease, you have to pay a refundable security deposit of
$5 hundred, and a monthly lease payment of $424 for 3 years, with
payments due at the beginning of the month.
If you buy, you will pay a downpayment of $21 hundred, and a
monthly loan payment of $565, over the same period of time, with
payments due at the end of the month. The car is estimated...
You are interested in leasing a car, and have been offered a 36-month lease with an...
You are interested in leasing a car, and have been offered a
36-month lease with an annual interest rate of 3%, monthly payments
of $400, and an optional lease buyout of $10,000.
a) What is the present value of the lease?
b) What is the future value of the lease?
The Keynesian perspective says that AD is unstable and changes in AD can cause either recession...
The Keynesian perspective says that AD is unstable and changes
in AD can cause either recession and unemployment or inflation.
These shifts of the AD curve demonstrate problems within our
economy that can be modified through government intervention.
Neoclassical economists say that the economy is self-correcting.
If there is a leftward shift (decrease) of AD, over time both
prices and wages will also decrease allowing the economy to find a
new equilibrium. They say there is no need for government...
A&D is considering leasing a new equipment. The lease lasts for 5 years. The lease calls...
A&D is considering leasing a new equipment. The lease lasts
for 5 years. The lease calls for 5 payments of $9,700 per year with
the first payment occurring immediately. The equipment would cost
$41,000 to buy and would be straight-line depreciated to a zero
salvage value over 5 years. The actual salvage value is negligible
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rate of 7%. The corporate tax rate is 25%. What is the after-tax
cash flow...
Green Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Green Corporation is considering leasing a new equipment. The lease
lasts for 8 years. The lease calls for 8 payments of $225,000 per
year with the first payment occurring immediately. The equipment
would cost $1,480,000 to buy and would be straight-line depreciated
to a zero salvage value over 8 years. The actual salvage value is
negligible because of technological obsolescence. The firm can
borrow at a rate of 6%. The corporate tax rate is 25%. The
corporate tax rate is...
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment.
The lease lasts for 8 years. The lease calls for 8 payments of
$225,000 per year with the first payment occurring immediately. The
equipment would cost $1,480,000 to buy and would be straight-line
depreciated to a zero salvage value over 8 years. The actual
salvage value is negligible because of technological obsolescence.
The firm can borrow at a rate of 6%. The corporate tax rate is 25%.
The corporate tax rate is...
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment.
The lease lasts for 8 years. The lease calls for 8 payments of
$225,000 per year with the first payment occurring immediately. The
equipment would cost $1,480,000 to buy and would be straight-line
depreciated to a zero salvage value over 8 years. The firm can
borrow at a rate of 6%. The corporate tax rate is 25%. The actual
pre-tax salvage value is $36,000. What would the NPV of the lease
relative...
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment.
The lease lasts for 8 years. The lease calls for 8 payments of
$225,000 per year with the first payment occurring immediately. The
equipment would cost $1,480,000 to buy and would be straight-line
depreciated to a zero salvage value over 8 years. The actual
salvage value is negligible because of technological obsolescence.
The firm can borrow at a rate of 6%. The corporate tax rate is 25%.
The corporate tax rate is...
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment.
The lease lasts for 8 years. The lease calls for 8 payments of
$225,000 per year with the first payment occurring immediately. The
equipment would cost $1,480,000 to buy and would be straight-line
depreciated to a zero salvage value over 8 years. The firm can
borrow at a rate of 6%. The corporate tax rate is 25%. The actual
pre-tax salvage value is $36,000. What would the NPV of the lease
relative...
Greencore Corporation is considering leasing a new equipment. The lease lasts for 8 years. The lease...
Greencore Corporation is considering leasing a new equipment.
The lease lasts for 8 years. The lease calls for 8 payments of
$225,000 per year with the first payment occurring immediately. The
equipment would cost $1,480,000 to buy and would be straight-line
depreciated to a zero salvage value over 8 years. The actual
salvage value is negligible because of technological obsolescence.
The firm can borrow at a rate of 6%. The corporate tax rate is 25%.
What is the after-tax cash...
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