Calculating annuity values-break-even resale price

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Reference no: EM131891556

Calculating Annuity Values

After deciding to get a new car, you can either lease the car or purchase it with a two-year loan. The car you wish to buy costs $31,500. The dealer has a special leasing arrangement where you pay $92 today and $492 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 5 percent, compounded monthly. You believe that you will be able to sell the car for $19,500 in two 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 $

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 decimal places, e.g., 32.16.)

Break-even resale price $

Reference no: EM131891556

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