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1. You want to buy a new car and use it for 3 years. You...

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Accounting

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1. You want to buy a new car and use it for 3 years. You have 2 options as presented in the Table below. Option A, buy new Option B, Lease car in cash the same car a) Initial upfront cost $25,000 $4,500 b) Annual maintenance cost (years 1, 2, and 3) $500 0 c) Annual payment to the dealer (years 1 and 2) 0 $3,000 d) Estimated selling price after 3 years $18,000 0 a) Draw timelines depicting these two cash flows b) Determine which option is preferable if the interest rate i = 4% 2

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