Question
Problem #1: Tony and Savannah would like you to help them address some of their financial goals. They would like to know if Savannah should
Problem #1:
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: 4 %
Down payment required: 20%
Residual Value: Please use $20, 741 for the estimated Blue Book Residual Value for 2021 Rav 4 model.
Lease Option:
Monthly Lease payment: $199
Due at leasing: $2,999
- How much do they have to pay monthly if they choose to finance?
- What is the PV of the financing option? (Please show your calculation on excel)
- What is the PV of the lease option? (Please show your calculation on excel)
- Which option would you recommend based on your calculation? Why?
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The Analysis And Use Of Financial Statements
Authors: Gerald I. White, Ashwinpaul C. Sondhi, Haim D. Fried
3rd Edition
0471375942, 978-0471375944
