A new car costs $21 000. Alternatively, the car can be leased for three years by making payments of $360 at the beginning of each month and can be bought at the end of the lease for $10 000. If interest is 8% compounded semi-annually, which alternative is preferable?

Question

Quizplus · Accepted Answer

The Answer is FV = $10 000; PMT = $360; I/Y = 8%; P/Y = 12; C/Y = 2; c =

; n = 3(12) = 36;
p = FV = $10 000; PMT = $360; I/Y = 8%; P/Y = 12; C/Y = 2; c = ; n = 3(12) = 36; p = - 1 = .0065582. (1.0065581969) + 10000.00(1.0065581969)-36

- 1 = .0065582.
FV = $10 000; PMT = $360; I/Y = 8%; P/Y = 12; C/Y = 2; c = ; n = 3(12) = 36; p = - 1 = .0065582. (1.0065581969) + 10000.00(1.0065581969)-36

(1.0065581969) + 10000.00(1.0065581969)^-36
FV = $10 000; PMT = $360; I/Y = 8%; P/Y = 12; C/Y = 2; c = ; n = 3(12) = 36; p = - 1 = .0065582. (1.0065581969) + 10000.00(1.0065581969)-36

A New Car Costs $21 000