Lease-versus-purchase decisionPersonal Finance ProblemJoanna Browne is considering either leasing or purchasing a new Chrysler Sebring...
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Lease-versus-purchase decisionPersonal Finance ProblemJoanna Browne is considering either leasing or purchasing a new Chrysler Sebring convertible that has a manufacturer's suggested retail price (MSRP) of $32,800. The dealership offers a 3-year lease that requires a capital payment of $3,350 ($2,950 down payment + $400 security deposit) and monthly payments of $502. Purchasing requires a $2,640 down payment, sales tax of 6.9% ($2,263), and 36 monthly payments of $901. Joanna estimates the value of the car will be $17,000 at the end of 3 years. She can earn 4.5% annual interest on her savings and is subject to a 6.9% 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. The total cost of leasing is $ . (Round to the nearest dollar.)
b.The total cost of purchasing is $ . (Round to the nearest dollar.)
c.Which should Joanna do?
Joanna should
lease
buy
the car.(Select from the drop-down menu.)
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