What is the cost today of purchasing the car

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If you decide to get a new car, you can either lease or purchase the car with a two year loan. The car you want to buy costs $39,000. There is a special on leasing where you can pay $107 today and $507 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% compounded monthly. You believe that you will be able to sell the car for $27,000 in two years.

What is the cost today of purchasing the car?

What break-even resale price in two years would you make indifferent between buying and leasing?

Reference no: EM132403156

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