You have decided to acquire a new car that costs $30,000. You are considering whether to lease it for three years or to purchase it and financing the purchase with a three year installment loan. The lease requires no down payment and lasts for three years. Lease payments are $400 monthly starting immediately, whereas the installment loan will require monthly payments starting a month from now at an annual percentage rate (APR) of 8%. The discount rate (APR) is also 8%. 1) If you expect the resale value of the car to be $20,000 three years from now, should you buy or lease it? 2) What is the break-even resale price of the care three years from now, such that you would be indifferent between buying and leasing it?
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “You have decided to acquire a new car that costs $30,000. You are considering whether to lease it for three years or to purchase it and ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
In which markets do investors sell shares of their company in countries and cities around the world?
Answers (1)
Wyatt is a businessman. He often travels to different places for business purposes and spends money on hotel stays and get-togethers with other businesspeople.
Answers (2)
On the basis of the following data, determine the value of the inventory at the lower of cost or market.
Answers (1)
Which are results of regulation in a mixed-market economy? Check all that apply. 1: compliance with laws 2: advantages for producers 3: control of markets 4: advantages for government 5: control of externalities The answers are only 1 and 5.
Answers (2)
The Bharu Violin Corporation has the capacity to manufacture and sell 5,000 violins each year but is currently only manufacturing and selling 4,800.
Answers (1)
New Questions in Business
Fuqua Company's sales budget projects unit sales of part 198Z of 10,100 units in January, 12,600 units in February, and 13,700 units in March. Each unit of part 198Z requires 3 pounds of materials, which cost $4 per pound.
Answers (1)
Strawberry Fields purchased a tractor at a cost of $39,000 and sold it two years later for $25,300. Strawberry Fields recorded depreciation using the straight-line method, a five-year service life, and an $7,000 residual value. Required: 1.
Answers (2)
2. Buckeye Industries has a bond issue with a face value of $1000. The value of Buckeye's asset is $1200. In one year they will be worth either $800 or $1400. The going rate on T-bill is 4 percent.
Answers (1)
What are we willing and able to buy
Answers (1)
The account cash overage is which type of account? an asset account a liability account a miscellaneous revenue account a miscellaneous expense account
Answers (1)