A used car that currently costs $35,000 will have a market value of $6,000 in four years. As a student, you cannot afford to pay $35,000, but you want to have a car while you are going to university for the next four years. Your father agrees to lend you $35,000 on the condition that you pay him $300 at the end of every month for the next four years and $35,000 at the end of the four years. The car dealer provides financing facilities, and you are qualified to get a lease for which you will have to make monthly, endofmonth payments of $850 for 48 months. (For calculation purposes, use 5 decimal places and final answers to 0 decimal places, e.g. 5,275.) Calculate the PV of lease.

PV of lease

$

Calculate the PV of loan from father.

PV of loan from father

$

Which option will leave you better off, assuming your cost of capital is 6 percent?

You should take?

the lease or the loan

.