Assume that you need a new car for exactly 4 years. You can either 1)...
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Assume that you need a new car for exactly 4 years. You can either 1) lease the car for 4 years 2) purchase the car with a four-year loan and sell it after 4 years.
The dealer has a leasing arrangement where you pay $4,400 today and $580 per month for the next four years.
If you purchase the car, you will pay it off in monthly payments over the four years at a stated interest rate of 12 percent, paid monthly.
In other words, your interest rate will be 1% per month.
The car you wish to buy costs $35,000. You believe that you will be able to sell the car for $15,000 in four years.
Should you buy or lease the car?
Please show work.
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