ou are planning to acquire a new carwith a negotiated purchase price of $50,000. Youprefer to turn...

Question

ou are planning to acquire a new carwith a negotiated purchase price of $50,000. Youprefer to turn your cars over after 4 years. You have two financing choices: lease or borrow& buy. You can obtain a four-year loan at 6% annual rate (which means 0.5% monthly rate)for the entire purchase price of the car. A four-year lease (equal monthly lease paymentsstart immediately) requires a down payment of $4,000. The market value of the car isexpected to depreciate 48% in four years. What is the break-even lease payment? Assumetaxes are irrelevant to this problem

Robert · Accepted Answer

You are planning to acquire a new car with a negotiated purchase price of $50,000. You prefer to 
turn your car over after 4 years. You have two financing choices: lease or borrow & buy. You 
can obtain a four year loan at 6% annual rate (which means 0.5% monthly rate) for the entire 
purchase price of the car. A four year lease (equal monthly lease payments start immediately) 
requires a down payment of $4,000. The market value of the car is expected to depreciate 48% in 
four years. What is the break even lease payment?

ou are planning to acquire a new carwith a negotiated purchase price of $50,000. Youprefer to turn your cars over after 4 years. You have two financing choices: lease or borrow& buy. You can obtain a...

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