What should you do, buy or lease

Assignment Help Management Theories

Reference no: EM133769287

Question: You are interested in getting a new Lexus and the dealer is willing to sell it to you for $35,000.

At the end of 4 years, you will sell the car at a value of $20,000.

Alternatively, you can lease it for $5,000 down and $450 per month ($5,400 per year).

The analysis should be done based on years not months.

Scenario 1: The funds used to either lease or buy are in an account earning 5% per year. What should you do? Buy or Lease?

Scenario 2: What if we change the scenario so that your opportunity cost of capital is 15%? What should you do? Buy or Lease?

There are 4 cases in total (Scenario 1 Buy, Scenario 1 Lease, Scenario 2 Buy, Scenario 2 Lease).

In each of the 2 scenarios, in the file, choose BUY or LEASE.

Reference no: EM133769287

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