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 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%.

Care lease, Q2

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?

Group of answer choices

18357

19385

21785

22987

Answer 1

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- 2x СР PE EPS, STOCK DIVIDEND - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins * Cut Σ AutoSum : A Calibri 11AA = = = Dr Wrap Text General E Copy Fill Paste BI U D A E Merge & Merge & Center - $ % 8 . Conditional Format Format Painter Cell Insert Delete Format Sort & Find & Formatting as Table Styles 2 Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing CH161 - for CB CCCDCECFCGCH CI CI CK CL CM CN со 144 145 146 COST TODAY OF LEASING THE CAR NOTE PVIFAD @(8%/12), 36 MONTHS 147 DOWN PAYMENT + (LEASE RENT X PVIFA @8%/12, 36 MONTHS) PVIFAD @ 0.66667%, 36 MONTHS 148 0+ (400 X 32.1245509) (1/r)*(1-(1/(1+r)^n)) 149 12849.82 (1/0.00666667)*(1-(1/(1+0.00666667)^36)) 150 32.1245509 151 RESALE PRICE OF CAR TO MAKE TWO OPTION INDIFFERENT 152 PURCHASE VS LEASE NOTE PVIF @ 0.5%, 36 MONTHS 153 30000 - (RESALE PRICE X 0.78725463) 12849.82 1/(1+r)^n 154 30000 - 12849.82 (RESALE PRICE X 0.78725463) 1/(1+0.006666667)^36 155 17150.2 (RESALE PRICE X 0.78725463) 0.78725463 156 ANS RESALE PRICE = 21785 157 158 159 160 161 162 163 164 WIN Red EV PE EPS DIV ABNORMAL deberk MARGIN MONEYmarginal tax PB ROPI APV ROSS price quote STOCK DIV NAV HEDGE FUND ME ferences: AL125 EVA MVA LEVERAGED BUY SWAII BOU 120% E R * H 10 - O ENG 06-11-2019