Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Is this a valid, in-depth question? Any tips would be really helpful on formulating this question better. Section 1: ROUGH DRAFT.... ANY HELP OR TIPS
Is this a valid, in-depth question? Any tips would be really helpful on formulating this question better.
Section 1: ROUGH DRAFT.... ANY HELP OR TIPS PLEASE? Rick has always dreamed of owning a Chevy Corvette since he was little. He recently payed off his entire college debt. So he decided to treat himself and head down to the Chevy dealer. After hours of browsing, he finds the make and model he has always desired. Before completing the purchase, the salesman lets him know about an zero down, replacement program. But is this any better than buying the car outright and taking the hit of depreciation? The monthly payment is $900 with an interest rate of 9%, compounded monthly. The Corvette's MSRP was $80,000, but it is selling for $72,000 because it is 3 years old. It is thought to depreciate at the same rate for the next 10 years. He only plans on keeping the car for 5 years until he buys the newer C9 Corvette. How many years would he need to lease the Corvette for it to be a better deal than buying it outright and selling it? (8000072000)/3=$2666.66= amount depreciated each year (2666.665)=$13333.33= amount depreciated over 5 years 72000-13333.33=\$58666.66=amount he would get back $13,333.33= amount lost over 5 years Then we need to see how much time it would take for the lease to equal the amount Rick gets back to see if its longer than 5 years. Use Present Value of an annuityStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started