Question

In: Finance

After deciding to get a new car, you can either lease the car or purchase it...

After deciding to get a new car, you can either lease the car or purchase it with a three-year loan. The car you wish to buy costs $34,500 (fancy car, isn't it!). The dealer has a special leasing arrangement where you pay $1 today and $450 per month for the next three years. If you purchase the car, you will pay it off in

monthly payments over the next three years at an 8 percent APR. You believe that you will be able to sell the car for $27,000 in three years.

a. Should you buy or lease the car?

b. What breakeven resale price in three years would make you indifferent between buying and leasing?

show all work on excel

Solutions

Expert Solution

SEE EXCEL SHEET IMAGE

GO THORUGH IT

ANY DOUBTS, PLEASE FEEL FREE TO ASK

GIVE POSITIVE FEEDBACK

(A) LEASE THE CAR : BETTER OPTION

(B)


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