3. Lease vs Buy: You are considering whether to buy or lease a Jeep Wrangler. For a Wrangler priced at $29,540, if you purchase it you will have a payment of $6,024/ year ($502/ month) for five years (at 5 percent financing with $2,954 down). If you lease you will pay $3,300/ year (\$275/month) for five years, with a down payment of $1,200. Note that these are monthly payments but we will treat these as annual payments for the calculations to simplify (i.e., just use $6,024 for the purchase and $3,300 for the lease annually). At the end of five years, the Jeep will have a salvage value of $17,000. Also, assume that the down payment and first year payments are due today (i.e., time zero) so that the second year payment is due in one year, third year payment in two years, etc. (this is important for discounting). a. After 4 years, how much more will the purchase have cost than the lease (i.e., total nominal money paid out)? Consider the total costs without time value of money. b. Assuming a discount rate of 6%, calculate the present value of the buy and lease cost on an annualized basis. Report the present values and indicate which is preferred