Business
Business, 16.04.2020 22:47, sum72

Lease-versus-purchase decision Personal Finance Problem Joanna Browne is considering either leasing or purchasing a new Chrysler Sebring convertible that has a manufacturer's suggested retail price (MSRP) of $ 33 comma 000. The dealership offers a 3-year lease that requires a capital payment of $ 3 comma 500 ($ 3 comma 100 down payment + $ 400 security deposit) and monthly payments of $ 493. Purchasing requires a $ 2 comma 600 down payment, sales tax of 6.4 % ($ 2 comma 112), and 36 monthly payments of $ 903. Joanna estimates the value of the car will be $ 17 comma 000 at the end of 3 years. She can earn 4.8 % annual interest on her savings and is subject to a 6.4 % sales tax on purchases. Make a reasonable recommendation to Joanna using a lease-versus-purchase analysis that, for simplicity, ignores the time value of money. a. Calculate the total cost of leasing. b. Calculate the total cost of purchasing. c. Which should Joanna do?

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Lease-versus-purchase decision Personal Finance Problem Joanna Browne is considering either leasing...

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