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You are purchasing a car and have the option to pay $26,000 in cash (upfront)...

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Finance

You are purchasing a car and have the option to pay $26,000 in cash (upfront) OR assume a lease with end of the month payments of $399 for five years. By purchasing, you will receive an estimated residual value (or scrap value) by selling the car for $2,500 at the end of the 5 years. If interest is 2.7% compounded annually, which financing option would you prefer?

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