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You are thinking about leasing a car, and the dealer offers you the following deal: You can drive the car off the lot today, with
You are thinking about leasing a car, and the dealer offers you the following deal: You can drive the car off the lot today, with no upfront payment if you agree to make annual payments of 7,348.09 for three (3) years. At the end of the lease, you can keep the car if you pay an additional $4,000 on the last day. Interest rates are 6%. What is the value of the car today given these two cash flow streams (the annual lease and the $4,000)?
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