Make you indifferent between buying and leasing

Assignment Help Financial Management

Reference no: EM131297692

SECOND TIME I SEND THIS QUESTION THE FIRST TIME YOU ONLY ANSWER THE FIRST PART.

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 $34,500. The dealer has a leasing arrangement where you pay $98 today and $498 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. You believe that you will be able to sell the car for $22,500 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 $

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 $

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 sale price $

Reference no: EM131297692

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