Reference no: EM13517814

Down Payment

$ 1,500.00

Lease Term
36
Months
Lease Payments
$ 189.00
Per Month
Buy Out Price
$ 12,000.00

Market Loan Rate
8%

Sales Tax
6.75%

Title Fee
$ 15.00




Allowed Miles
36,000
Miles
Overage Miles Fee
$ 0.15
Per Mile
Excess Wear & Tear Fee Applies
1.Assume that you can buy the vehicle for $17,000 before tax and title.

What is the NPV of the car if you lease?

What is the NPV of the car if you buy it?

(Round up to the nearest dollar amount. DO NOT use $, commas, or decimal points) (Example $-23,345.50 is entered as -23346)




2.Explain to me the relationship between the NPV of the lease versus the outright purchase. What does it mean? Is the lease a good value compared to buying outright?

3.For the following questions, assume that the lease and buy are both reasonable values and that you are paying a 15% interest rate (after tax) on credit card debt. You also plan to keep the vehicle beyond the lease term. In other words, you would exercise the purchase option at the end of the lease term.

3. Assume for this question that you take advantage of the opportunity to pay off credit card debt with the monthly lease savings.

What is the NPV of the lease?

What is the NPV of buying it outright?

4. Assume for this questions that you do not take advantage of the opportunity to pay off credit card debt with the monthly lease savings.

What is the NPV of the lease?

What is the NPV of buying it outright?

(Round up to the nearest dollar amount. DO NOT use $, commas, or decimal points) (Example $-23,345.50 is entered as -23346)