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Brianna was offered two options for a car she was purchasing: Lease option: Pay lease amounts of $400 at the beginning of every month for
Brianna was offered two options for a car she was purchasing:
- Lease option: Pay lease amounts of $400 at the beginning of every month for 6 years. At the the end of 6 years, purchase the car for $13,500.
- Buy option: Purchase the car immediately for $25,000.
The money is worth 7.40% compounded monthly.
a. What is the Discounted Cash Flow (DCF) for the lease option?
b. Which is the better option?
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