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The Financial Advisor is a weekly column in the local newspaper. Assume you must answer the following question: I need a new car that i
The Financial Advisor is a weekly column in the local newspaper. Assume you must answer the following question: "I need a new car that i will keep for 5 years. The car costs $25, 999 and I have three options. I can (A) pay $25, 999 now, (B) make monthly payments for a 9% 5-year loan with $0 down, or (C) make lease payments for $470 per month or the next 5 years. The lease option also requires a security deposit of $1500. What should 1 do?" Assume that the vehicle's value after 5 years is $7000. Remember that lease payments are made at the beginning of the month, and the salvage value is received only if you own the vehicle (a) Plot a graph to compare the EUAC of the three-alternatives for nominal interest rates from 0% to 50%. (b) Using GOAL SEEK and your graph in part (a), build a choice table. (c) If i = 9%, use an incremental rate of return analysis to recommend which option should be chosen
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