You want to purchase a brand new 2018 BigUmer. Your nearest dealership, Big Motors, is selling it for $25,000. You have enough cash in the bank, currently earning 15% interest (APR with monthly compounding). Big Motors is also promoting the following two financing schemes: A lease with $2,000 down, $450 per month for 36 months starting next month, and a residual value of $18,000 in 3 years. Note that this means that you have the choice of buying the car in three years for $18,000 or simply giving it back to the dealership. A 3-year, $5,000 down, 0% loan. Note that this means the car is yours after 36 monthly payments. 3 After some research, you also find that 3-year-old used BigUmers sell for one-third of their original purchase price in an active used car market (i.e. you expect to have no trouble buying it at that discounted price in three years). What is the optimal purchasing strategy? Obviously, you want a car at the end of the three years.

A. Take the lease and buy the car at the end of the 3-year period

B. Take the lease, return the car at the end of the 3-year period and buy a used car

C. Take the loan

D. Buy the car with cash