PROBLEM After deciding to buy a new car, you can either lease the car or purchase it on a three-year loan. The car you wish to buy costs $35,000. The dealer has a special leasing arrangement where you pay $99 today and $499 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at a 6% Annual Percentage Rate. You believe you will be able to sell the car for $23,000 in three years. a) What is the present value of the leasing option? b) What is the present value of the buying option? c) Should you buy or lease the car? ( d) What break-even resale price in three years would make you indifferent between buying and leasing? (7 3

Evaluating financing packages. Assume that you’ve been shopping for a new car and intend to finance part of it through an installment loan. The car you’re looking for has a sticker price of $18,000. Custom Vehicles has offered to sell it to you for $3,000 down and finance the balance with a loan that will require 48 monthly payments of $333.67. However, a competing dealership will sell you the exact same vehicle for $3,500 down, plus a 60-month loan for the balance, with monthly payments of $265.02. Which of these two financing packages is the better deal?

After deciding to buy a new car, you can either lease the car or purchase it on a three-year loan. The car you wish to buy costs $35,000. The dealer has a special leasing arrangement where you pay $99 today and $499 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at a 6% APR. You believe you will be able to sell the car for $23,000 in three years. All final answers are rounded to the nearest dollar. Choose all correct statements from the below.   Question 6 options:   If you sell the car after three years, the PV of purchasing the car is $15,780.   Purchasing is always preferable if the APR is below 6%.   The PV of leasing the car is $17,502.   If the APR increases to 8.4%, you should lease the car.   You should lease the car given that the PV of leasing is higher.

After deciding to acquire a new car, you realize you can either lease the car or purchase it with a two-year loan. The car you want costs $34,000. The dealer has a leasing arrangement where you pay $97 today and $497 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 6 percent. You believe that you will be able to sell the car for $22,000 in two years.   What is the present value of purchasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)   Present value of lease $   What is the present value of leasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)   Present value of purchase $   What break-even resale price in two years would make you indifferent between buying and leasing? (Do not round intermediate calculations and round your answer to 2…