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Present value dollars of buying the truck

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Aldo plans to purchase an F-150 Ford pickup truck for $21,000. He has the cash and if he does not spend it on the truck, it will sit in his money market account earning 0.1% per month. Ford is offering a lease-with-an-option-to-buy plan, which requires a $3,000 down payment (up front) and then payments at the END of the next 36 months of $259. At the end of the third year, he has the option to purchase the truck for $10,000.

(a) Assuming Aldo plans to exercise the purchase option, how do I calculate the present value dollars of buying the truck outright or acquiring it via the lease/buy option?

Reference no: EM132248361

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