# 3 Questions of of Corporate Finance.

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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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