Can you show what the excel spreadsheet look like

1. Start a new Excel spreadsheet and set up the following columns:

- Mileage: enter an exponential distribution formula with a mean of 25,000 miles

- Interest Rate: enter a normal distribution formula with a mean of 8.5% and a standard deviation of 1%

- Purchase Price: enter the purchase price of $43,240

- Lease Payment: enter the monthly lease payment of $458

- Down Payment: enter the down payment of $7,500

- Mileage Charge: enter the mileage charge of 24 cents/mile

- End Value: enter the value of the car at the end of the lease, $29,732

- Total Cost (Purchase): enter a formula to calculate the total cost of purchasing the car, which is the purchase price plus any other charges (taxes, maintenance, plates, etc.)

- Total Cost (Lease): enter a formula to calculate the total cost of leasing the car, which is the down payment plus the lease payments plus the mileage charges plus any other charges (taxes, maintenance, plates, etc.)

- Net Present Value (Purchase): enter a formula to calculate the net present value of purchasing the car, which is the total cost minus the value of the car at the end of the lease

- Net Present Value (Lease): enter a formula to calculate the net present value of leasing the car, which is the total cost minus the down payment

2. Enter the formula for each column.

3. Use the Excel Data Analysis tool to run a simulation with 1,000 iterations.

4. Run a summary statistic analysis to calculate the probability that the lease option results in a lower net present value than does the purchase option.

5. Interpret the results of the summary statistic analysis to determine if the lease option is a better value than the purchase option.

Step-by-step explanation

The first step in solving this problem using Excel is to set up the spreadsheet. This involves creating columns for the various variables needed to calculate the net present value (NPV) of both the purchase and lease options. These variables include: the mileage driven over the 24 months, the interest rate over the 24 months, the purchase price of the car, the monthly lease payment, the down payment, the mileage charge, the value of the car at the end of the lease, the total cost for both the purchase and lease options, and the NPV for both the purchase and lease options.

Once the spreadsheet is set up, the next step is to enter the formulas into each column. This includes entering an exponential distribution formula with a mean of 25,000 miles for the Mileage column, a normal distribution formula with a mean of 8.5% and a standard deviation of 1% for the Interest Rate column, the purchase price and monthly lease payment in the corresponding columns, the down payment and mileage charge in their respective columns, the value of the car at the end of the lease in the End Value column, and formulas to calculate the total cost and NPV for the purchase and lease options.

Once the formulas are entered, the next step is to use the Excel Data Analysis tool to run a simulation with 1,000 iterations. This will generate 1,000 sets of data with which to compare the NPV of both the purchase and lease options.

The final step is to run a summary statistic analysis to calculate the probability that the lease option results in a lower NPV than does the purchase option. This can be done by calculating the mean of the NPV values for both options and then comparing them. If the mean NPV of the lease option is lower than that of the purchase option, then the lease option is likely to be the better value.

In conclusion, solving this problem using Excel involves setting up the spreadsheet, entering the formulas for each column, running a simulation with 1,000 iterations, and running a summary statistic analysis to calculate the probability that the lease option results in a lower NPV than does the purchase option. By following these steps, it is possible to determine whether the lease option is a better value than the purchase option.