Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A company could either buy or lease the truck. If the company buys the truck for $80,000, it can run it with routine maintenance &

A company could either buy or lease the truck. If the company buys the truck for $80,000, it can run it with routine maintenance & repairs for 5 years and sell it for $20,000. It will have to finance the truck purchase by paying 6% financing for 5 years, compounded monthly, from Auto Finance. The amortization of the loan financing has to be paid at the end of each month. Alternatively, the company can lease the truck with the lease payment due at the beginning of each month. Should the company buy or lease the truck? What other considerations should apply in the lease versus purchase decision of the company for the purchase of the truck?

There are three major personal financial decisions that a typical family will have to take in the normal course of events; a house purchase; retirement; and financing/supporting their children's education. Assume the following goals: Accumulating a down payment of $20,000 for a house in 4 years. Accumulating enough savings to finance a $40000 per year retirement in 35 years for the rest of their life. Creating a fund of $60,000 to support their child(ren)'s education in 20 years.

Without assuming support from any government policy/program, calculate the monthly savings the couple needs to make, to realize these goals, if the annual rate of return on investments is historically 5% per year. How would your answer change if the annual rate of inflation is assumed to be 2% per annum and the family would like to keep the above goals in real terms by accounting for inflation? How will the monthly savings goal be impacted if the family also has to pay off a Canadian mortgage of $400,000 over 25 years at an assumed average APR of 4%.

PLZ someone answer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

International Financial Management

Authors: Jeff Madura

7th Edition

0324071744, 978-0324071740

More Books

Students also viewed these Finance questions