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1) You are purchasing a car and have the option to pay $64,000 today OR assume a lease with beginning of the month payments of
1) You are purchasing a car and have the option to pay $64,000 today OR assume a lease with beginning of the month payments of $1,100 for six years. Also, if you buy the car, it is assumed the car could be sold after 6 years for $8,000 (salvage or scrap value you receive), BUT the leasing option would not receive this. If interest is 11% compounded annually, which financing option is cheaper using Discounted Cash Flows? (6 marks) 1a) What is the cost of buying the car (DCF in today's' dollars). 1b) What is the cost of leasing the car. (DCF in today's dollars) 1c) Which is cheaper
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