Your rental company wants to purchase a new car for its car rental business. The car costs $20,000. It will be obsolete in three years. Your options are to borrow the money at 10% or lease the car. If you lease it, the payments will be $7,500 per year, payable at the beginning of each year. If you buy the car, you can apply a CCA rate of 30% per year. The tax rate is 35%. Assume that the car has a projected salvage value of $700 and the asset pool is closed, what would be NAL. Should you buy or lease? Why?
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Your rental company wants to purchase a new car for its car rental business. The car costs $20,000. It will be obsolete in three years. Your options are to borrow the money at 10% or lease the car. If you lease it, the payments will be $7,500 per year, payable at the beginning of each year. If you buy the car, you can apply a CCA rate of 30% per year. The tax rate is 35%. Assume that the car has a projected salvage value of $700 and the asset pool is closed, what would be NAL. Should you buy or lease? Why?
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- After deciding to acquire a new car, you can either lease the car or purchase it with a three-year loan. The car you want costs $37,000. The dealer has a leasing arrangement where you pay $2,400 today and $580 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at an APR of 6 percent. You believe that you will be able to sell the car for $22,000 in three years. a. What is the present value of leasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value of purchasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What break-even resale price in three years would make you indifferent between buying and leasing?After deciding to buy a new car, you can either lease the car or purchase it on a three-year loan. The car you wish to buy costs $35,000. The dealer has a special leasing arrangement where you pay $99 today and $499 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at a 6% APR. You believe you will be able to sell the car for $23,000 in three years. All final answers are rounded to the nearest dollar. Choose all correct statements from the below. Question 6 options: If you sell the car after three years, the PV of purchasing the car is $15,780. Purchasing is always preferable if the APR is below 6%. The PV of leasing the car is $17,502. If the APR increases to 8.4%, you should lease the car. You should lease the car given that the PV of leasing is higher.After deciding to acquire a new car, you realize you can either lease the car or purchase it with a two-year loan. The car you want costs $34,000. The dealer has a leasing arrangement where you pay $97 today and $497 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 6 percent. You believe that you will be able to sell the car for $22,000 in two years. What is the present value of purchasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value of lease $ What is the present value of leasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value of purchase $ What break-even resale price in two years would make you indifferent between buying and leasing? (Do not round intermediate calculations and round your answer to 2…
- After deciding to buy a new car, you can either lease the car or purchase it on a three- year loan. The car you wish to buy costs $35,000. The dealer has a special leasing arrangement where you pay $99 today and $499 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at a 6 percent APR. You believe you will be able to sell the car for $23,000 in three years. What break-even resale price in three 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 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 valueSuppose that you decide to buy a car for $57,000, including taxes and license fees. You saved $10,000 for a down payment. The dealer is offering you a choice between two incentives. Incentive A is $6000 off the price of the car, followed by a five-year loan at 7.03%. Incentive B does not have a cash rebate, but provides free financing (no interest) over five years. What is the difference in monthly payments between the two offers? Which incentive is the better deal? Use PO L-GOT PMT= *** The difference in monthly payments between the two offers is $. (Round to the nearest cent as needed.)After deciding to get a new car, you can either lease the car or purchase it with a three-year loan. The car you wish to buy costs $39,500. The dealer has a special leasing arrangement where you pay $108 today and $508 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at an APR of 6 percent, compounded monthly. You believe that you will be able to sell the car for $27,500 in three years. What is the cost today of purchasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Cost of purchasing $ What is the cost today of leasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Cost of leasing S What break-even resale price in three years would make you indifferent between buying and leasing? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Break-even…
- Suppose that you decide to buy a car for $65,000, including taxes and license fees. You saved $13,000 for a down payment. The dealer is offering you a choice between two incentives. Incentive A is $7000 off the price of the car, followed by a three-year loan at 6.37%. Incentive B does not have a cash rebate, but provides free financing (no interest) over three years. What is the difference in monthly payments between the two offers? Which incentive is the better deal?Suppose that you decide to buy a car for $63,000, including taxes and license fees. You saved $12,000 for a down payment. The dealer is offering you a choice between two incentives. Incentive A is $6000 off the price of the car, followed by a five-year loan at 7.72%. Incentive B does not have a cash rebate, but provides free financing (no interest) over five years. What is the difference in monthly payments between the two offers? Which incentive is the better deal? Use PMT= The difference in monthly payments between the two offers is $ (Round to the nearest cent as needed.) Which incentive is the better deal? Choose the correct answer below. A. Incentive A is the better deal. B. Incentive B is the better deal. PA n nt 1 - ( 1₁ + -/-) - ² nSuppose that you decide to buy a car for $58,000, including taxes and license fees. You saved $10,000 for a down payment. The dealer is offering you a choice between two incentives. Incentive A is $7000 off the price of the car, followed by a three-year loan at 5.53%. Incentive B does not have a cash rebate, but provides free financing (no interest) over three years. What is the difference in monthly payments between the two offers? Which incentive is the better deal? Use PMT=Prn1−1+rn−nt.
- There are two options to purchase a car: a 5-year loan vs. a lease of the car. The price of the car is $50,000. If you purchase the car, you are going to pay it off in monthly payments over the next 5 years at an annual percentage rate of 6.99 percent. You expect to sell the car for $28000 in five years. If you lease the car, you have to pay 20% of the price of the car today and $550 per month for the next five years. Should you lease or buy the car? What break-even resale price in five years would make you indifferent between two options? (Your answers should be accurate to the nearest dollar)You are shopping for a car and read the following advertisement in the newspaper: "Own a new Spitfire! No money down. Four annual payments of just$10,000." You have shopped around and know that you can buy a Spitfire for cash for$32,500. What is the interest rate the dealer is advertising (what is the IRR of the loan in the advertisement)? Assume that you must make the annual payments at the end of each year.You buy a ten-year-old car for $12,000. You decide to pay $2000 down, and the used car dealer gives you a “special” rate of “9% monthly” for 48 months. a) What is your monthly payment? b) How much of your first payment goes to interest? c) How much interest do you pay for the entire loan? d) What is your final payment on this car?