. 2. Refer to the Modelling worksheet. You are interested in either buying or leasing a car. The price of the car is $50,000. If you buy the car, you have to make a down payment of 30% of the car price today. Thereafter, you will finance the balance with a 3-year car loan at 5% per annum. If you lease the car, you do not have to make the down payment. The monthly lease is $850. At the end of 3 years, you plan to purchase the car from the car-leasing firm by paying a residual value of $25,000. You have access to an investment product that yields 6% per annum. The first loan repayment or first lease payment would occur at the end of the next period (i.e., Time 1 in the worksheet). (a) [15 marks] Construct a financial model in the Modelling worksheet. Headers are provided in the worksheet to guide you, but you need not use them. Suppose you choose to lease the car, how much savings would you have at the end of the term? Difference BUY scenario Monthly payment LEASE scenario Lease payment Time Downpayment Residual value Total payment (Buy) $ 15,000 Total payment (Lease) Savings from LEASE vs. BUY Lease 50,000 $50,000 15,000 Buy Car price $ Downpayment (96) Residual value Term (years) Interest rate Monthly payment Annual returns on alternative investment OS 1 2 2 3 31 3 596 4 $ $ $ S S $ S $ 850.00 5 6 7 Savings at end of term (lease vs. buy) ) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 $ $ S S $ $ $ $ S $ $ $ s S $ $ $ $ $ $ $ S $ S $ $ S $ $ S $ S $ $ S S 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048,98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 1,048.98 30 31 32 33 34 35 36