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GM is currently selling new cars for $45,000. If you wish, you can lease the car (instead of purchasing) for $910 per month paid


 

GM is currently selling new cars for $45,000. If you wish, you can lease the car (instead of purchasing) for $910 per month paid at the beginning of each month, leased over 36 months. Suppose interest rates are i(12) = 6%. You have two choices: lease the car for 36 months; or, purchase it now with cash, and then sell the car for its residual value in 36 months. What must the value of the car be in 36 months for you to be indifferent between the 2 options?

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