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Please present all final answers to two decimals for number (e.g. 1.23) and two decimals for percent FULL working must be presented (with formulas, working
Please present all final answers to two decimals for number (e.g. 1.23) and two decimals for percent
FULL working must be presented (with formulas, working stages, and results with units).
Question 4 (50 marks) Consider the following three deals for the purchase of a $50,000 car. Deal A: Purchase the car outright, in an all-cash deal, paid up-front. Deal B: Finance the purchase of the car at 12% APR, compounded monthly, over 60 months (each instalment is made at the end of each month), with a deposit of $5,000. Deal C: Lease the car over 60 months, with financing of the car at 12% APR, and an additional depreciation expense of 1% per month, with a deposit of $5,000. In addition, assume the car depreciates in value and it is worth only $6,000 at the end of the 60 months period. Based on an opportunity cost of 5%, compounded monthly: a. Prepare a brief analysis of the true cost of each deal (15 marks max for each); and b. Advise a potential buyer which deal should be selected, and why. (45 marks) (5 mark) (Show ALL workings)Step by Step Solution
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