Roger has landed his first big contract. He is thinking of purchasing or leasing a Bentley 1. He can buy his dream car by taking out a 5 year loan for $20,000 at 7.30% interest rate per annum. He will need to repay in fixed monthly payments.
2. He can lease the vehicle from a local dealership instead. This 5 year lease option will require a $4,000 down payment and monthly payments of $230. The salvage value of the new vehicle after 5 years is $6,500 and you can invest at a rate of return of 4%
Buy
Personal Investment Rate 4.0%
Interest Rate 7.30%
Number of years Value of Loan $20,000.00
Salvage Value 6,500 ($398.86)
Car Loan Payments
Lease
Down Payment 4,000
Monthly Payments 230
NPV of Buying $16,334

Wo firms, a and b, each currently dump 50 tons of chemicals into the local river. the government has decided to reduce the pollution and from now on will require a pollution permit for each ton of pollution dumped into the river. it costs firm a $100 for each ton of pollution that it eliminates before it reaches the river, and it costs firm b $50 for each ton of pollution that it eliminates before it reaches the river. the government gives each firm 20 pollution permits. government officials are not sure whether to allow the firms to buy or sell the pollution permits to each other. what is the total cost of reducing pollution if firms are not allowed to buy and sell pollution permits from each other? what is the total cost of reducing pollution if the firms are allowed to buy and sell permits from each other? a. $3,000; $1,500 b. $4,500; $3,500 c. $4,500; $4,000 d. $4,500; $2,500