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You want to buy the car CR-V, it leases from $78@2.99% APR (weekly lease for 60 months) with semi-annual compounding. 1. If you elect to
You want to buy the car CR-V, it leases from $78@2.99% APR (weekly lease for 60 months) with semi-annual compounding.
1. If you elect to lease the vehicle for 60 months, paying $78 per month. What is the present value of the total financing cost of the vehicle over 60 months?
2. Instead you elected to buy a CR-V that is 2 years old with the following assumptions:
- You finance the purchase with zero down, interest is 3.99% APR with semi-annual compounding and you repay the loan over 60 months.
- After 60 months you sell the vehicle
- Cost of purchase can be found at this link https://www.autotrader.ca/
Answer these questions:
- What is the present value of the total financing cost?
- What is the difference in the present value of the financing costs between the purchasing the used car or leasing a new car options?
- What additional information do you need to consider in order to fully make this comparison?
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