Business, 27.06.2020 20:01 jadebetancourt

Roger has landed his first big contract. He is thinking of purchasing or leasing a Bentley 1. He can buy his dream car by taking out a 5 year loan for $20,000 at 7.30% interest rate per annum. He will need to repay in fixed monthly payments.
2. He can lease the vehicle from a local dealership instead. This 5 year lease option will require a $4,000 down payment and monthly payments of $230. The salvage value of the new vehicle after 5 years is $6,500 and you can invest at a rate of return of 4%
Buy
Personal Investment Rate 4.0%
Interest Rate 7.30%
Number of years Value of Loan $20,000.00
Salvage Value 6,500 ($398.86)
Car Loan Payments
Lease
Down Payment 4,000
Monthly Payments 230
NPV of Buying $16,334

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Roger has landed his first big contract. He is thinking of purchasing or leasing a Bentley 1. He ca...