Suppose you have the option to purchase the car using the loan detailed in the amortization table, or you can lease the car over the same period. If you lease the car you will need to make a $1,000 down payment up front, but your monthly payments will only be $400. If you lease the car then you will have to return it to the dealership at the end of the 3 years, but if you purchase the car you will be able to sell it. You estimate that you would be able to sell the car for $14,000. If you are able to borrow and lend at 15.5%, is it better to purchase or lease? (i.e.- which has the lowest overall cost?) 15.5% Discount Rate Purchase Car Monthly Payments Sell Price S Lease Car Down Payment $ Monthly Payments 14,000.00 2 B 1,000.00 400.00 51 2 53 NPV of Purchasing NPV of Leasing Purchase or Lease? G H Interest 32 E F Month Beginning Payment Balance 1 S 32,000.00 $ 959.07 $ 2 $ 31,174.26 $ 959.07 $ 3 $ 30,345.09 $ 959.07 $ $ 29,512.46 $ 959.07 $ 5 $ 28,676.36 $ 959.07 $ 6 $ 27,836.77 $ 959.07 $ 7 $ 26,993.69 $ 959.07 S S 26,147.10 $ 959.07 $ 9 $ 25, 296.97 $ 959.07 $ 10 $ 24.443.31 $ 959.07 S 11 $ 23,586.09 $ 959.07 S 12 $ 22,725.29 $ 959.07 S 13 $ 21,860.91 $ 959.07 $ 14 $ 20,992.93 $ 959.07 S 15 S 20,121.33 $ 959.07 $ 16 $ 19,246.11 $ 959.07s 17 $ 18,367.23 $ 959.07 S 18 $ 17.484.69 $ 959.07 S 19 S 16,598.47 S 959.07 S 20 S 15,708.57 $ 959.07 S 21 $ 14,814.95 $ 959.07 $ 22 $ 13,917.61 S 959.07 $ S 13,016.53S 959.07 $ $ 12.111.70 $ 959.07 $ 25 $ 11,203.09 S 959.07 $ 26 $ 10,290.71 $ 959,07 S 27 5 9,374,51 s 959.07 $ 28 8,454.51 $ 959.073 $ 2,530,66 $ 359.075 30 S 6,602.97 $ 959.07 S 31 $ 5,671 429 959.07 S 22 4.735.98 33 953,07 S 3.296.04 S 959.071 4 5 2,853 39 959.07 S 35 1300225 19.07 951.07 133.33 $ 129.89 $ 126,44 S 122.97 $ 119.48 115.99 $ 112.47 $ 108.95$ 105.40 $ 101.85$ 98.28 $ 94.69 $ 91.09 S 87.47 S 83.84 $ 80.19 $ 76.53 $ 72.85 S 69.16 $ 65.45 $ 61.73 $ 57.99 $ 54.24 S 50.47 $ 45.68 $ 42.88S 39.06 $ 35.23 $ 21:38 S 27.51 S 23.63 5 19.73 Principal 825.74 $ 829.18 $ 832.63 $ 836.10 S 839.58 $ 843.08 $ 846.59 $ 850.12 s 853.66 $ 857.22s 860.79 $ 864.38 $ 867.98 S 871.60 $ 875.23 $ 878.88 $ 882.54 $ 886.22 $ 889.91 S 893.62 $ 897.34 $ 901.08 $ 904.83 S 908.60 $ 912.39 $ 916.19 $ 920.01$ 923.84 $ 927.095 98150 9.15.44S Ending Balance 31,174.26 30,345.09 29,512.46 28,676.36 27,836.77 26,993.69 26,147.10 25,296,97 24,443.31 23,586.09 22,725.29 21,860.91 20,992.93 20,121.33 19,246.11 18,367.23 17,484.69 16,598.47 15,708.57 14,814.95 13,917.61 13,016 53 12.111.70 11,203.09 10,290.71 9,37451 8,454.51 7.530.66 1735.98 64 551 You want to purchase a new car by taking out a 3 year loan for $32,000 with a 5% interest rate and monthly payments. Create an amortization table to show the breakdown of all the payments. Month Beginning Payment Interest Balance 1 $ 32,000.00 $ 959.07 $ 133.33 $ 2 S 31,174.26 S 959.07 S 129.89 $ 3 S 30,345.09 S 959.07 $ 126.44 $ 4 $ 29,512.46 S 959.07 S 122.97 S 5 $ 28,676,36 $ 959.07 $ 119.48 $ 3 6 $ 27,836.77 S 959.07 S 115.99 $ 4 7 $ 26,993.69 $ 959.07 112.47 $ 5 8 S 20,147.10 $ 959.07 108.95 $ 16 9 S 25, 296.97 $ 959.07 105.40 10 $ 24,443.31 S 959.07 $ 101.85$ 18 11 S 23,586.09 $ 959.07 $ 38.28 $ 19 12 $ 22,725.29 $ 959.07 $ 94.69 $ 20 23 $ 21,850.91 $ 959.07 $ 91.09 $ 21 14 $ 20,992.93 $ 959.07 $ 87,47 S 22 15 $ 20,121.33 959.07 S 83.84 $ 23 16 S 19,246.11 $ 959.07s 80.19 s 24 17 $ 18,367.23 $ 959.07 76.53 $ 25 1N $ 17,484.69S 959.07S 72.85$ 26 19 $ 16,598,47 959.07 $ 27 69.16 S 20 $ 15,708.57% 959.07 $ 65.45 $ 28 21 S 14,814.95 S 959.07 $ 61.79 29 22 $ 13,917.61. S 959.07 S 30 57.993 20 S 15.016.53 $ 999,073 31 54,24 5 24 5 12.111.709 959.07 S 12 50.475 11,203.09 959.07 s 46.68 $ 26 S 10,290.71 S 959.07 34 $ 27 S 9,374.51 S 959.07 29.065 S 1,454.515 30 959.07 29 7,530,66 S 27 959.07 $ 30 0,12,97 2751 Directions 01 04 Q5 Read Principal Ending Balance 825.74 $ 31,174.26 829.18 S 30,345.09 832.63S 29,512.46 836.10 $ 28,676.36 839.58 S 27,836.77 843.08 $ 26,993.69 846.59 $ 26,147.10 850.12 S 25, 296.97 853.66 S 24,443.31 857.22 $ 23,586.09 860.79 $ 22,725.29 864.38 S 21,860.91 867.98 $ 20,992.93 871.60 20,121.33 875.23 S 19,246.11 878.88 $ 18367.23 882.54 S 17.484.69 886.22 $ 16,598.47 889.91S 15,708.57 893.62 S 14,814.95 897.34 $ 13.917.01 901.00 $ 11,016 53 90483S 12.111.70 908,60S 11,201.09 912.399 10,271 916.15 37451 920,01$ 45451 921. $27.00 $ G H AB C Month 7 8 9 20 21 22 23 24 25 26 27 21 29 30 31 32 39 1 2 3 4 5 5 7 8 9 10 11 12 13 14 15 16 12 18 19 20 21 22 23 24 25 20 27 28 29 30 21 32 Beginning Balance $ 33,000.00 $ $ 32,122.82 $ S 31,243.45 $ $ 30,361.88 $ $ 29,478.10 S $ 28,592 125 $ 27.703.92 $ $ 26,813.50 $ 25.920.85$ $ 25,025.97 $ $ 24.128.86 $ 23,229.50 $ $ 22.327.89 $ 21,424.035 $ 20,517.91 $ $ 19,609.53 18,698.87 $ 17.785.94 $ 16,870.72 $ S 15,953.22 $ 15,033.42 14,111,33 $ $ 13,156,93 $ 5 12,260,21 S 11,331 10,393 S 9,466.15 S 8,530,14 $ 7,551.289 S 6,651,08S $ 5,708.01S 4,762.62 S 3,145 S $ 2,364.705 5 1,912.199 5 952.299 Payment 959.68 $ 959.68 $ 959.68 $ 959.68 $ 959.68 $ 959.68s 959.68 $ 959.68 $ 959.68 959.68 $ 959.685 959.68 $ 959.68 959.68 $ 959.689 959.68 $ 959. S 159.68S 959,68 $ 959.68 $ 959.68S 999.68S 959.685 959.685 959.68 $ 959.68 959.69 959.68 $ 959.68 959.68 999.08 955.68 999.68 559.68 959.685 95.00 $ $ Ending Balance 32,122.82 31,243,45 30,361.88 29,478.10 28,592.12 27,703.92 26,813.50 25,920.85 25.025.97 24.128.86 23,229.50 22,327.89 21,424.03 20,517.91 19,629,53 18,698.87 17.785.94 16,870.72 15,953.22 15,033.42 14,111.33 13,116,93 12,260,21 11,301.18 10.399.83 9,466.15 8,530.14 7,59178 6,651.00 SZOKOS 4,762.02 2,14.85 2,644,20 1,912.19 Interest Principal 82.50 $ 877.18 80.31 879.37 78.11 $ 881.57 $ 75.90 $ 883.785 73.70 $ 885.98 $ 71.48 $ 888.20 S 69.26 $ 890,42 $ 67.03 $ 892.65$ 64.80 $ 894.88 $ 62.56 $ 897.11 S 60.32 $ 899.36 s 58.02 S 901.61 S 55.82S 903.86 53.56 S 906.12$ 51.29 $ 908.39 $ 49.02 910.66 $ 46.75 912.93 $ 44.46 $ 915.22$ 42.18$ 917.50 39.88 919.80S 37,585 922.10 35.28 924.40 LS 32.97 925.711S 30.65 $ 929.03 28.23. 931.35 26.00 $ 938.68 23.07 S 926.01$ 21.335 938.35 18.08 940.70 S 16.033 + 943.03 $ 14.27 545.41 11.913 347.775 9545 950.14 7.16 S 952.52 4.78 951.90 2.39 $ 957,25 $ $ 5 35 36 117 38 39 10 41 42 LE DE SE 9E Directions 01 Q2 EO 04 Q5 Ready