Lease-versus-purchase decision Personal Finance Problem Joanna Browne is considering either leasing or purchasing a new...
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Lease-versus-purchase decision Personal Finance Problem Joanna Browne is considering either leasing or purchasing a new Chrysler Sebring convertible that has a manufacturer's suggested retail price (MSRP) of $33,000. The dealership offers a 3-year lease that requires a capital payment of $3,500 ($3,100 down payment + $400 security deposit) and monthly payments of $493. Purchasing requires a $2,600 down payment, sales tax of 6.4% ($2,112), and 36 monthly payments of $903. Joanna estimates the value of the car will be $17,000 at the end of 3 years. She can earn 4.8% annual interest on her savings and is subject to a 6.4% sales tax on purchases. Make a reasonable recommendation to Joanna using a lease-versus-purchase analysis that, for simplicity, ignores the time value of money.
a.Calculate the total cost of leasing.
b.Calculate the total cost of purchasing.
c.Which should Joanna do?
*Please show work if possible
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