3 Questions of of Corporate Finance.

SoccerBoss
Category:
Business & Finance
Price: $5 USD

Question description



  1. The following data applies to the next 3 questions.

    After deciding to buy a new car, you can either lease the car or purchase it with a three-year loan. The car costs $30,000. The dealer has a lease program where you pay $100 today and $400 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at a 8 percent APR. You believe that you will be able to sell the car for $20000 in three years.

    What is present value of leasing including the initial payment of $100?

     

    a

    $12,554.51

    b

    $12,864.72

    c

    $13,855.46

    d

    $14,235.67

    e

    $14,587.82

  1. What is the cost of keeping the car for three years by purchasing it?

    a

    $14,254.91

    b

    $14,898.33

    c

    $15,234.54

    d

    $15,400.35

    e

    $15,667.67


  1. How much is the breakeven resale price of the car in three years that would make you indifferent between leasing and buying?

    a

    $19,225.37

    b

    $19,451.25

    c

    $19,515.35

    d

    $20,259.53

    e

    $21,765.86


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(Top Tutor) Daniel C.
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