Question $3.(10$pts$)$

Case Study: Lease or Buy?

Many people lease their vehicle rather than baying it$.$ The main reason is to avoid tying up so much of one's money in an astomobile.

You determine that you can buy a mew velicle for a total cost of $$20,000,$ of you can lease the same whicle by paying $$5000$ down plas lease payments of $$400$ ewry mobath for $4$ yours. At the end of the lease agreement, you return the car to the dealer and walk away.

If you bay the car, best estimates are that in $4$ ywars you will be able to sell it for $$1,000.$

Ignoring all other factors, at what amual isterest rate compounded monthly are those options equivalent?

Instruction: Drawing e time diagram$($s$)$ and writing an cypantion of walue is suthirat for this question.