Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 25PROB
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Question
OLA #10.2
Natalie was offered two options for a car he was purchasing:
- Lease option: Pay lease amounts of $450 at the beginning of every month for 5 years. At the the end of 5 years, purchase the car for $14,000.
- Buy option: Purchase the car immediately for $30,000.
The money is worth 7.70% compounded monthly.
a. What is the Discounted Cash Flow (DCF) for the lease option?
b. Which is the better option?
Lease Option
Buy Option
Kindly use all the decimals DO NOT ROUND
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