You are buying a new Audi A6. You have two options. The first option is you...

 

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You are buying a new Audi A6. You have two options. The first option is you can buy the car outright for 72 monthly payments of $1,024 starting a month from today. Alternatively, you can first lease the car for 3 years and then buy the car at the end of the three-year lease. The cost of the lease is $5,335 today and then 36 monthly payments, starting one month from today, of $769 a month. Finally, at the end of the last payment, you need to pay $34,655 for the car. If the discount rate is 4,2% annual with monthly compounding, which option should you choose? a. Buy outright b. Lease the car for first 3 years and then buy the car You are buying a new Audi A6. You have two options. The first option is you can buy the car outright for 72 monthly payments of $1,024 starting a month from today. Alternatively, you can first lease the car for 3 years and then buy the car at the end of the three-year lease. The cost of the lease is $5,335 today and then 36 monthly payments, starting one month from today, of $769 a month. Finally, at the end of the last payment, you need to pay $34,655 for the car. If the discount rate is 4,2% annual with monthly compounding, which option should you choose? a. Buy outright b. Lease the car for first 3 years and then buy the car

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