Question
After deciding you want a new car, you can either lease the car or purchase it with a two-year loan. The car you want costs
After deciding you want a new car, you can either lease the car or purchase it with a two-year loan. The car you want costs $34,000. The dealer has a special leasing arrangement where you pay $97 today and $497 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 6 percent. You believe that you will be able to sell the car for $22,000 in two years. What is the present value of purchasing the car?
In spreadsheet:
PV of resale Price?
PV of Purchase?
PV of lease payments?
PV of resale price at breakeven?
Breakeven resale Price?
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