Question

Facts and Assumptions: Lease Term in Months 24 Lease Down Payment $ 500.00 Monthly Lease Payments $ 300.00 Sales Tax Rate 8% Lease Buyout at End $ 15,000.00 Title Fee $ 25.00 Car Loan Market Rate 7% Outright Purchase Price Before Tax and Title $ 19,500.00 What is the NPV of the lease?

What would it cost you to buy the car today if you were paying cash? Round you answer to the nearest whole number. Do not use $, commas, or decimal points and enter as a positive number.

Answer 1

NPV of the lease
Outright purchase price	$19,500
Down payment of Lease	$500
Title Fees	$25
Sales tax	$1,560
Monthly installment
1	$300	1.00583	$298.26
2	$300	1.011693989	$296.53
3	$300	1.017592165	$294.81
4	$300	1.023524727	$293.10
5	$300	1.029491876	$291.41
6	$300	1.035493814	$289.72
7	$300	1.041530743	$288.04
8	$300	1.047602867	$286.37
9	$300	1.053710392	$284.71
10	$300	1.059853523	$283.06
11	$300	1.066032469	$281.42
12	$300	1.072247439	$279.79
13	$300	1.078498641	$278.16
14	$300	1.084786288	$276.55
15	$300	1.091110592	$274.95
16	$300	1.097471767	$273.36
17	$300	1.103870028	$271.77
18	$300	1.11030559	$270.20
19	$300	1.116778671	$268.63
20	$300	1.123289491	$267.07
21	$300	1.129838269	$265.52
22	$300	1.136425226	$263.99
23	$300	1.143050585	$262.46
24	$300	1.14971457	$260.93
			$6,700.80
NPV of lease = Down payment of lease + Pv of monthly installment
= $500+$6700.80
=7200.80
Cost of car
Outright purchase price	$19,500
Title fees	$25
Sales tax	1562
Cash price of car	$21,087