1) Using net present value calculations, determine which has a higher ROI. Assum
ID: 2807732 • Letter: 1
Question
1) Using net present value calculations, determine which has a higher ROI. Assume the average mileage under both options is 15,000 miles. The car will be sold for its Kelly Blue Book value at the end of ownership or it will be returned to the leasing dealership for no additional lease/return/mileage cost. The automobile being considered is a 4-cyl, 2.5 liter, two-wheel drive, Nissan Rogue sport utility. At the end of the 6 years, the automobile is in very good condition. Tax, title, or license fees are not considered under either option.
Buying a Nissan Rogue today for $32,000, putting $10,000 down and taking a six-year loan for the rest at 4%
or
Leasing the Rogue for 6 years at $360 a month with a down payment of $3,500 due at delivery. The car must be returned at the end of the lease. 15,000 miles per year are allowed under this lease plan.
Show your work and explain your rationale.
Explanation / Answer
iF dOWN PAYEMNT OF 10000 IS PAID
USING pmt FUNCTION INEXCEL,
TOTAL COST= (4196*6)+10000=$35181 (APPROX)
uNDER THE LEASE PLAN
As per the above calculation lease option will be cheap.
Down Payement 10000 Balance 22000 Intrest 4% Installment 6 EMI ($4,196.76)Related Questions
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