Problem #1:

Please show calculations on Excel.

Tony and Savannah would like you to help them address some of their financial goals. They would like to know if Savannah should lease or buy (finance) her next car (2021 Toyota Rav 4). They try to change their car every 4 years. Assume 2% inflation.

Additional Information:

Finance Option:

MSRP: $26,000

Interest Rate: 3 %

Down payment required: 30%

Residual Value: $20, 741

Lease Option:

Monthly Lease payment: $189

Due at leasing: $2,999

1. How much do they have to pay monthly if they choose to finance? Please show calculations using Excel.
2. What is the PV of the financing option? (Please show your calculation on excel)
3. What is the PV of the lease option? (Please show your calculation on excel)
4. Which option would you recommend based on your calculation? Why?
5. If they choose to change their car every 6 years, which option would you recommend based on your calculation? Explain?