Jennifer Ratushny is a middle-level manager at a New Brunswick–based advertising agency. Her contract of employment requires her employer to provide her with an automobile for personal use. Two years ago, the employer purchased for her an automobile that cost $23,000. All costs to operate the vehicle are paid by Ratushny. She is not required to use the vehicle for any of her employment duties.

The employment contract also stipulates that Ratushny may, if she chooses, purchase the vehicle from the employer at any time for a price equal to the depreciated value of the car. The automobile’s depreciated value is now $14,000.

Ratushny is thinking of purchasing the car from her employer. Her bank is willing to loan her the money for it at 8%. The car is in good condition. If she makes the acquisition, she intends to use the car for at least three more years. A friend of hers, who is in the automobile business, has informed her that, subject to any mechanical problems, the car should have a resale value of $8,000 three years from now.

Ratushny earns a high salary; her marginal income tax rate is 45%.

Required:

Should Ratushny purchase the car at this time, or should she continue to use it as an employer-owned vehicle?