Sylvia and Roger would like you to help them address some of their financial goals. They would like to know if Sylvia 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?

*What is the PV of the lease option?

*Which option would you recommend based on your calculation? Why?

Please show your calculations