Question
Could you please check and send me the last results, because the system announced the wrong answer. Thanks Question 1 George was offered two options
Could you please check and send me the last results, because the system announced the wrong answer. Thanks
Question 1
George was offered two options for a car he was purchasing:
- Lease option:Pay lease amounts of $400 at the beginning of every month for 3 years. At the the end of 3 years, purchase the car for $11,500.
Buy option:Purchase the car immediately for $21,000.
The money is worth 5.60% compounded monthly.
a.What is the Discounted Cash Flow (DCF) for the lease option?
b.Which is the better option? Lease Option or Buy Option
Question 2
James purchased two trucks for his warehouse for a total of $62,000. This investment saved him $13,000 in truck rental charges every year (from the 1st year), for 8 years. At the end of year 8, he sells both the trucks for a total of $11,500.
a.What is the Net Present Value (NPV) of the investment if the required rate of return is 6%?
b.Does the investment meet the required rate of return?
Step by Step Solution
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Step: 1
George The formula for the present value of an annuity is Pmt 1 1 rn r 1 r Where PV is Present Value ...Get Instant Access to Expert-Tailored Solutions
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