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You are interested in a new Ford Taurus. After visiting your Ford dealer, doing your research on the best leases available, you have three options.

(i) Purchase the car for cash and receive a $1,500 cash rebate from Dealer A. The price of the car is $15,000.

(ii) Lease the car from Dealer B. Under this option, you pay the dealer $500 now and $200 a month for each of the next 36 months (the first $200 payment occurs 1 month from today). After 36 months you may buy the car for $8,000.

(iii) Purchase the car from Dealer C who will lend you the entire purchase price of the car for a zero interest 36-month loan with monthly payments. The car price is $15,000. Suppose the market interest rate is 6%. What is the net cost today of the cheapest option?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M940636

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