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After deciding to buy a new car, you can either lease the car or purchase it on a two-year loan. The car you wish to buy costs $33,000. The dealer has a special leasing arrangement where you pay $95 today and $495 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at a 5 percent APR. You believe you will be able to sell the car for $21,000 in two years.

What break-even resale price in two years would make you indifferent between buying and leasing?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91697830

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