Develop a choice table for nominal interest rates

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Assume that the vehicle described in Problem 8-40 will be kept for 10 rather than 5 years. If leased, the vehicle can be purchased for its value at the end of 5 years. At the end of 10 years, the vehicle will be worth $2000.

(a) Develop a choice table for nominal interest rates from 0% to 50%. (You do not know what the reader's interest rate is.)

(b) If i = 9%, use an incremental rate of return analysis to recommend which option should be chosen. (c) Are your answers different than in Problem 8-40? Why or why not?

Reference no: EM131808967

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