There is a choice to buy a car worth $28,000 with 100% financing at 4.99% APR for 60 month or lease at $450 per month. The car will need maintenance in the 3rd year worth $525 and $825 in the 4th year. The car will have 35% residual value in the 5th year. Sales tax on new car is 6% and required rate of return is 5%.

1) Calculate the Ownership Operating Advantage in year 5.

a) ($939)

b) ($1764)

c) $8861

d) ($1464)

2) Calculate the Ownership Operating Advantage in year 4.

a) 8861

b) ($939)

c) ($1764)

d) ($1464)

Answer rating: 100% (QA)

1 a Cost of buying car Purchasing cost 28000 at rate of interest 499 ... View the full answer