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this is all information provided Problem 4 You plan to buy a particular car: a) (6 points) You have the option to buy the car
this is all information provided
Problem 4 You plan to buy a particular car: a) (6 points) You have the option to buy the car for $64.6K. You can put down 86K and finance the rest for 5 years. At the end of the fifth year you want to sell the car. What is the monthly payment for the b) (25 points) You also have the option to lease the car for 5 years by paying upfront SK and then making a monthly payment of $450 per month for 6 months. At the end of the 5 years you have the option to return the car or buy it for the price of $30K. Analyze both options and compare them using NPV to determine what the reselling price of the car in option (a) should be, for the option in (a) to be better than the option in (b). Comment on your results. In both options consider anmual nominal rate of 4% compounded monthly Hent if 2 10,1)Step by Step Solution
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