A luxury car can be leased for $679 per month for 36 months. Terms are first month’s lease payment, a $625 refundable security deposit, a consumer down payment of $3500, and an acquisition fee of $725 due at lease signing. Tax, license, title fees, and insurance extra. Option to purchase at lease end for $37,775 plus a fee of $350.Mileage charge of $0.20 per mile over 30,000 miles. Determine the interest rate (nominal and effective) for the lease. The MSRP is $64,025. You could buy the car for $58,000, if you arranged other financing.

A luxury car can be leased for $679 per month for 36 months. Terms are first month’s lease payment, a $625 refundable security deposit, a consumer down payment of $3500, and an acquisition fee of $725 due at lease signing. Tax, license, title fees, and insurance extra. Option to purchase at lease end for $37,775 plus a fee of $350.Mileage charge of $0.20 per mile over 30,000 miles. Determine the interest rate (nominal and effective) for the lease. The MSRP is $64,025. You could buy the car for $58,000, if you arranged other financing.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 15P

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