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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:

  1. What is the present value of the total financing cost?
  2. What is the difference in the present value of the financing costs between the purchasing the used car or leasing a new car options?
  3. What additional information do you need to consider in order to fully make this comparison?

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