Problem 4-60 Calculating Annuity Values

After deciding to get a new car, you can either lease the car or purchase it with a two-year loan. The car you wish to buy costs $30,500. The dealer has a special leasing arrangement where you pay $90 today and $490 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 7 percent, compounded monthly. You believe that you will be able to sell the car for $18,500 in two years.

What is the present value of purchasing the car?