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A young graduate is trying to decide whether to lease or buy a car for the next three years. The cash flows for each choice
A young graduate is trying to decide whether to lease or buy a car for the next three years. The cash flows for each choice are shown below. (We will ignore gas, insurance, and tag fees.) YEAR 3 LEASE -$4,315.00 -$3,500.00 -$3,500.00 -$3,500.00 PURCHASE -$36,861.00 0 0 $23,835.00 The graduate has a personal discount rate of 7.00%. What is the NPV of leasing the car for three years? (HINT: Answer will be a NEGATIVE number) Submit Answer format: Currency: Round to: 2 decimal places. What is the NPV of purchasing the car and selling after three years? (HINT: The answer will be a negative number...) Submit Answer format: Currency: Round to: 2 decimal places. At what discount rate would the graduate be indifferent between the two choices? Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
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