=+P17–6 Lease-versus-purchase decision Antonio Di Capri is looking to get the new Alfa Romeo Giulia, a luxury sport sedan. He can either buy it at a retail price of €38,000 or get a lease from an auto dealership. The dealership offers a 5-year lease that requires an initial payment of €5,000 (€5,000 down payment + €5,000 security deposit) and monthly payments of €450. Purchasing requires a €2,500 down payment, sales tax of 22% (€6,160), and 60 monthly payments of €500. Antonio estimates that the value of the car will be €10,000 at the end of 5 years. He can earn 3% annual interest on his savings and is subject to a 22% sales tax on purchases.

Make a reasonable recommendation to Antonio, using a lease-versus-purchase analysis that, for simplicity, ignores the time value of money.