Michael decides to buy a car that is priced at $23,000 inclusive of all taxes and administrative fees. Mike does not have enough money to make an outright purchase. His opportunity cost of money is 0.6% per month. Mike is looking at the following two alternatives to acquire the car:

Alternative P. Acquire the car by signing a 36-month loan to finance the purchase payment. Loan payments will be $750/month, payable end of month. No up-front payment is needed. Alternative L. Get a 36-month lease on the car by putting in a down payment of $2,000, followed by 36 end of month lease payments of $350/month. Miles allowed is 36,000 over 3 years. If the miles driven is > 36,000, there is an excess mileage charge of $0.25/mile. Also, there is $500 turn in fee due at the end of the lease term.

Michaels research shows that he can sell the car for $13,000 at the end of 3 years assuming he puts in < 36,000 miles, which he is certain based on his transportation needs for next 3 years. Which alternative should Michael choose? Rationalize using TVM concepts