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E11-7 (Algo) Deciding to Lease or Buy [LO 11+3, 11.5] Your friend Harold is trying to decide whether to buy or lease his next vehicle.
E11-7 (Algo) Deciding to Lease or Buy [LO 11+3, 11.5] Your friend Harold is trying to decide whether to buy or lease his next vehicle. He has gathered informotion about each option but is not sure how to compare the ahematives. Purchasing a new vehicle will cost $27,500, and Harold expects to spend about $600 per year in maintenance costs. He would keep the vehicie for five years and estimates that the salvage value will be $10,900. Alternatively. Harold could lease the same vehicle for five years at a cost of $3.575 per year, including maintenance. Assume a discoumt rote of 12 percent Required: 1. Calculate the net present value of Harold's options. Future Value or S1. Present Value of S1, Euture Value Appuity of S1, Present. Value Annuity of 51 2. Advise Harold about which option he should choose Complete this question by entering your answers in the tabs below. Calculate the net present value of Harold's options. (Future Value of \$1. Present Value of \$1, Future Value Annuity of \$1. Present Value Annuity of \$1.) N1, Present Use appropriate factor(s) from the tables provided. Nogative amounts should be indicated by a minus sign. Round your final anmers to 2 decimal places. E11-7 (Algo) Deciding to Lease or Buy [LO 11-3, 11.5] Your friend Harold is trying to decide whether to buy or lease his next vehicle. He has gathered information about each option but is not sure how to compare the alternatives. Purchasing a new vehicle will cost $27,500, and Harold expects to spend about $600 per year in maintenance costs. He would keep the vehicle for five years and estimates that the salvage value will be $10,900. Alternatively. Harold could lease the same vehicle for five years at a cost of $3.575 per year, including maintenance. Assume a discount rate of 12 percent Required: 1. Calculate the net present value or Horold's options. (Euture Value of S1. Present Volue of $1. Euture Volue Annuity of $1. Present Value Annuity of 51.) 2. Advise Harold obout which option he should choose. Complete this question by entering your answers in the tabs below. Advise Harold about which option he should choose. TABLE 11.1. Future Value of \$1 TABLE 11.2 A Present Value of $1 TABLE 11.3A Future Value of an Annuity of $1 TABLE 11.4A Present Value of Annuity of \$1
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