Make you indifferent between buying and leasing

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Reference no: EM131545490

After deciding you want a new car, you can either lease the car or purchase it with a two-year loan. The car you want 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. You believe that you will be able to sell the car for $19,500 in two years.

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 value $

What is the present value of leasing the car? (Do not round intermediate calculations and round your final 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 final answer to 2 decimal places (e.g., 32.16).)

Break-even sale price $

Reference no: EM131545490

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