You want to purchase or lease a car and keep it for 6 years. The car costs $35,000. 1. You can finance the car for its full value over 6 years at 4% interest or 2. you can lease the car for 4 years and pay the residual on a 2 year loan at the end of the 4 years. The lease is at 3% and the residual value of the car is $15,000. At the end of the 4 year lease, you will have to borrow to pay the balance $15,000, and that loan will cost 5% and will be paid off at the end of 6 years at the same time the finance basis is paid. In both cases, the salvage value of the car is $9000.

Using Excel what are the NPV values for the two options based on 6% interest costs? Which is the best choice based on NPV?