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After deciding you want a new car, you can either lease the car or purchase it with a two-year loan. The car you want costs $32,000. The dealer has a special leasing arrangement where you pay $93 today and $493 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 an APR of 7 percent. You believe that you will be able to sell the car for $20,000 in two years.

What is the present value of purchasing the car? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)

Present value $

What is the present value of leasing the car? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)

Present value $

What break-even resale price in two years would make you indifferent between buying and leasing? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)

Break-even sale price $

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92424617

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