AUTO LEASE VERSUS PURCHASE: 48 MONTH LEASE 50,000...
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AUTO LEASE VERSUS PURCHASE: 48 MONTH LEASE 50,000 <- Manufacturer's suggested retail price 45,000 Negotiated price 415-Paid both by the lessee and the buyer 450 Paid only by the lessee 450-refunded at end of lease MSRP Capitalized cost Destination charge Acquisition fee Security deposit Payment due at signing Monthly payment Residual value after 4 years as % of MSRP Lease residual value after 4 years 1,315 400 - Dealer's lease offer 60% 30.000 (16 points) You are considering acquiring a new luxury car. The detailed of your negotiation for a 48-month lease are listed to the left. a. If your alternative cost of financing is 6%, should you buy or lease? b. If you financed the purchase throught the bank at 6%, what would your monthly payment be? c. As your estimated residual value (cell B14) gets larger, does leasing or buying become more advantageous? Explain. d. What is the estimated residual value for which you are indifferent between buying and leasing? AUTO LEASE VERSUS PURCHASE: 48 MONTH LEASE 50,000 <- Manufacturer's suggested retail price 45,000 Negotiated price 415-Paid both by the lessee and the buyer 450 Paid only by the lessee 450-refunded at end of lease MSRP Capitalized cost Destination charge Acquisition fee Security deposit Payment due at signing Monthly payment Residual value after 4 years as % of MSRP Lease residual value after 4 years 1,315 400 - Dealer's lease offer 60% 30.000 (16 points) You are considering acquiring a new luxury car. The detailed of your negotiation for a 48-month lease are listed to the left. a. If your alternative cost of financing is 6%, should you buy or lease? b. If you financed the purchase throught the bank at 6%, what would your monthly payment be? c. As your estimated residual value (cell B14) gets larger, does leasing or buying become more advantageous? Explain. d. What is the estimated residual value for which you are indifferent between buying and leasing?
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SOLUTION a If your alternative cost of financing is 6 you should calculate the total cost of owning the car over 48 months including the purchase pric... View the full answer
Related Book For
Personal Financial Planning
ISBN: 978-1305636613
14th edition
Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Posted Date:
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