Lease or Buy

 Many people lease their vehicle rather than buying it. The main reason is to avoid tying up so much of one's money in an automobile.You determine that you can buy a new vehicle for a total cost of $30, 000, or you can lease the same vehicle by paying $5000 down plus lease payments of $400 every month for 4 years. At the end of the lease agreement, you return the car to the dealer and walk away. If you buy the car, best estimates are that in 4 years you will be able to sell it for $10, 000. 

Ignoring all other factors, at what annual interest rate compounded monthly are these options equivalent?

Answer rating: 100% (QA)

Heres the analysis to determine the equivalent annual interest rate for leasing or buying the car co... View the full answer