Should he lease or buy the car

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Reference no: EM132902633

Question - Williams has a choice of purchasing a car for $40,000 with 5% interest cost to borrow and a three-year repayment period for leasing the vehicle.  Leasing the auto would cost a 500 a month for a three-year term.  The sales tax is 6 percent.  The car is expected to have a value of $20000 at the end of the leasing period. Williams can obtain 7 percent after-tax on similar marketable investments.  Should he lease or buy the car? Please use both NPV and IRR methods.

Reference no: EM132902633

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