3. You are considering buying or leasing a car for about 12 years. You have 2 options. The car is worth $45,000 and it will depreciate to a salvage valus of $5,000 over 10 years, based on the SOYD depreciation target. You may lease the car for 4 years or finance and pay for it over 6 years. THe intent is to own a car for 12 years, meaning that the lease would be replaced every 4 years while the purchase would be replaced over every 6 years.. Based in NPV at the end of 12 years, which option is best... a) Under the purchase plan, you would buy the car, financed at an annual rate of 6% - paid annually and after 6 years, you would sell the car at the SOYD depreciated value after 6 years. You would then use the proceeds of the sale as a down payment on a new car. At the end of the 12 years, you would again sell the car at the SOYD depreciated value. b) You lease the car, making payments over 4 years that provide the lease company with 5% return over the 4 years, at which time, the car is returned - and the value is the SOYD depreciated value after 4 years. Your payments result in a future value for the leasing company that is equal to the SOYD depreciated value. This process is repeated 3 times, after which you return the third car with no salvage to you - the leasing company will sell the car separately. 3. You are considering buying or leasing a car for about 12 years. You have 2 options. The car is worth $45,000 and it will depreciate to a salvage valus of $5,000 over 10 years, based on the SOYD depreciation target. You may lease the car for 4 years or finance and pay for it over 6 years. THe intent is to own a car for 12 years, meaning that the lease would be replaced every 4 years while the purchase would be replaced over every 6 years.. Based in NPV at the end of 12 years, which option is best... a) Under the purchase plan, you would buy the car, financed at an annual rate of 6% - paid annually and after 6 years, you would sell the car at the SOYD depreciated value after 6 years. You would then use the proceeds of the sale as a down payment on a new car. At the end of the 12 years, you would again sell the car at the SOYD depreciated value. b) You lease the car, making payments over 4 years that provide the lease company with 5% return over the 4 years, at which time, the car is returned - and the value is the SOYD depreciated value after 4 years. Your payments result in a future value for the leasing company that is equal to the SOYD depreciated value. This process is repeated 3 times, after which you return the third car with no salvage to you - the leasing company will sell the car separately