What is the present value of leasing the car

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Reference no: EM131020851

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 $36,000. The dealer has a special leasing arrangement where you pay $101 today and $501 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 $24,000 in two years.

What is the present value of purchasing the car?

What is the present value of leasing the car?

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

Reference no: EM131020851

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