A Stevens alumnus is considering buying or leasing a new car as a graduation reward. The lease
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Question:
A Stevens alumnus is considering buying or leasing a new car as a graduation reward. The lease involves a down payment of $7,000 at the time of signing the lease agreement and $700 (end-of-period) monthly payments for 24 months. It does not have a salvage value or O&M costs. Buying the car involves a purchase price of $30,000 and monthly O&M costs of $100 . The car will have a resale value of $20,000 at the end of 24 months. Using a MARR of 2% (monthly): IV-
a) Draw the cash flow diagram for the incremental project (high cost - low cost option)
b) Calculate the incremental IRR for the incremental project in part a).
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