Automobile dealers are increasingly advertising the leasing of vehicles in lieu of purchasing. In...
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Automobile dealers are increasingly advertising the leasing of vehicles in lieu of purchasing. In one case, a $ automobile can be leased for $ per month for months, after which it is returned to the dealer. If the automobile is purchased, it could be financed for years at a annual rate with a down payment of and equal monthly payments. If at the end of the month period the vehicle is estimated to be worth $ which would be the preferred alternative? Assume that the time value of money to the buyer is also per annum for this scenario. Answer it is cheaper to lease. The present value of the lease is $ and the present value of the purchase is $
Automobile dealers are increasingly advertising the leasing of vehicles in lieu
of purchasing. In one case, a $ automobile can be leased for $ per
month for months, after which it is returned to the dealer. If the automobile
is purchased, it could be financed for years at a annual rate with a
down payment of and equal monthly payments. If at the end of the
month period the vehicle is estimated to be worth $ which would be the
preferred alternative? Assume that the time value of money to the buyer is
also per annum for this scenario.
Answer it is cheaper to lease. The present value of the lease is $
and the present value of the purchase is $
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