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Sophie was offered two options for a car she was purchasing: Lease option: Pay lease amounts of $350 at the beginning of every month for
Sophie was offered two options for a car she was purchasing:
- Lease option: Pay lease amounts of $350 at the beginning of every month for 7 years. At the the end of 7 years, purchase the car for $11,500.
- Buy option: Purchase the car immediately for $27,000.
The money is worth 5.00% compounded monthly.
a. What is the Discounted Cash Flow (DCF) for the lease option?
Which is the better option?
Lease Option
or
Buy Option
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