What is the cost of buying in today dollars

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Question - A car can be purchased for $33,800 today and an additional payment of $4,000 in 3 years from today. It would then be sold (salvage value) after 7 years for $7,000. Alternatively, it could be leased for 7 years with 449.00 end of the month payments. Using DCF and a cost of money of % compounded annually, which option is better or cheaper?

a. What is the cost of buying in today's dollars (DCF)?

b. What is the cost of leasing in today's dollars (DCF)?

Reference no: EM132780560

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