Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:Joan has a choice of purchasing a car for $20,000 with 9.7% interest cost to borrow and a 3 year repayment
period with monthly payment. Leasing the auto would cost $300 a month for a 3 year term. The sales tax is
6%. The car is expected to have a value of $14,000 at the end of the leasing period. Joan can obtain 7% after
tax on similar marketable investments. Should she lease or buy the car?
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