Business, 13.03.2020 03:36 Cassandoo

After deciding to buy a new car, you can either lease the car or purchase it on a two-year loan. The car you wish to buy costs $30,500. The dealer has a special leasing arrangement where you pay $90 today and $490 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 7 percent. You believe you will be able to sell the car for $18,500 in two years.

a. What is the cost today of purchasing the car?
b. What is the cost today of leasing the car?
c. What break-even resale price in two years would make you indifferent between buying and leasing?

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After deciding to buy a new car, you can either lease the car or purchase it on a two-year loan. The...

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