A company has spent $35000 a year for the past three years on car rentals...
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A company has spent $35000 a year for the past three years on car rentals for its employees. The company would like to determine if it would be better to sign a three year lease or purchase three new cars at a cost of $28000 each and then sell them at the end of three years. To purchase the cars would require no money down, would require monthly payments, and could be financed over 36 months at an annual rate of 3.25% compounded monthly. Assume they would depreciate at 25% a year. A three year lease would require $1500 per car at signing, then monthly payments of $385 per car per month.
a. What would the monthly payments be if the company purchased the cars?
b. What would the total value of the three cars be after three years if they had been purchased?
c. What would the total cost be to lease the cars for three years?
d. How much would the company save by leasing rather than purchasing the three cars?
A company has spent $35000 a year for the past three years on car rentals for its employees. The company would like to determine if it would be better to sign a three year lease or purchase three new cars at a cost of $28000 each and then sell them at the end of three years. To purchase the cars would require no money down, would require monthly payments, and could be financed over 36 months at an annual rate of 3.25% compounded monthly. Assume they would depreciate at 25% a year. A three year lease would require $1500 per car at signing, then monthly payments of $385 per car per month.
a. What would the monthly payments be if the company purchased the cars?
b. What would the total value of the three cars be after three years if they had been purchased?
c. What would the total cost be to lease the cars for three years?
d. How much would the company save by leasing rather than purchasing the three cars?
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