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Suppose you can buy a new Toyota Corolla for $18,000 and sell it for $13,000 in the third year. For simplification, assume you sell the
Suppose you can buy a new Toyota Corolla for $18,000 and sell it for $13,000 in the third year. For simplification, assume you sell the car at the beginning of the third year but can keep driving it until the end of the third year. Alternatively, you can lease the car for $325.00 per month for three years and return it at the end of the three years. For simplification, assume that lease payments are made yearly instead of monthlyi.e., that they are $3,900 per year and are made at the beginning of each of the three years. If the interest rate, R, is 6 percent, is it better to lease or buy the car? If the interest rate is 6 percent, then it is better to Which is better if the interest rate is 11 percent? If the interest rate is 11 percent, then it is better to At what interest rate would you be indifferent between buying and leasing the car? You would be indifferent if the interest rate were percent. (Enter a numeric response rounded to two decimal places.)
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