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A new small truck is offered for sale at $15,000 or it can be leased with a 36-month closed-end lease for S300per month. If the truck is purchased it will be kept for six years and it is expected to be sold for S5000. if the truck is leased, there will be a S1,200 lease signing fee and it will be operated for 3 years and returned to the dealer with no cash payments. Draw the cash flows for the two options. Find the effective interest rate per month that gives equivalent cash flows for each option over the 6- year period. Assume that operating and maintenance costs for the two options are expected to be the same.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92750695

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