Your friend Horold is trying to decide whether to buy or lease his next vehicle....
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Your friend Horold is trying to decide whether to buy or lease his next vehicle. He has gathered information about each option but is not sure how to compore the alternatives. Purchasing a new vehicle will cost $28,500, and Harold expects to spend about $700 per year in maintenance costs. He would keep the vehicle for flve years and estimates that the salvage value will be $11,300. Alternatively, Harold could lease the same vehicle for five years at a cost of $3,705 per year, including maintenance. Assume a discount rate of 11 percent. Required: 1. Calculate the net present value of Harold's options. (Euture Value of \$1.Present Value of \$1, Future Value Annuity of \$1. Present Value Annuity of \$1.) 2. Advise Harold about which option he should choose
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