Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I can lease the BMW for 36 months and give it back at the end of the lease term. Then, lease a new model for

image text in transcribed
I can lease the BMW for 36 months and give it back at the end of the lease term. Then, lease a new model for the next 24 months and give it back at the end of 2028. This way, I will have a BMW for the next 5 years, like alternative 1. Lease is available on new 2024 BMW 430i Convertible models to qualified customers with excellent credit history. For the model I picked with MSRP of $52,950.00, I must put a down payment of $3,000 plus a destination and handling fee of $925 at the beginning. The monthly lease payments are $649 per month for 36 months. After 36 months (in December 2026), I will turn in the 2024 model and lease new BMW 430i Convertible for 24 months (until the end of 2028). The lease agreement is very similar to the first one. I must put a down payment of $3,000 plus a destination and handling fee of $925 at the beginning. However, since it is my second lease, I receive a $1,500 credit against my down payment which reduces it to only $1,500. The monthly lease payments are $549 per month for 24 months. At the end of 2028 , I turn in the car and walk away. a) Report the cash flow chart of this alternative. b) Calculate the net present value of ownership with this alternative, if the discount rate to calculate the net present value of the cash flow is 3.66%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions

Question

How do people respond to public health campaigns?

Answered: 1 week ago