There is a choice to buy a car worth $32,000 with 100% financing at 3.99%...
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There is a choice to buy a car worth $32,000 with 100% financing at 3.99% APR for 60 month or lease at $500 per month. The car will need maintenance in the 3rd year worth $525 and $825 in the 4th year. The car will have 30% residual value in the 5th year. Sales tax on new car is 6% and required rate of return is 5%.
Which option is better?
a. Leasing since IRR is 3.79%
b. Buying since IRR is 8.65%
c. Leasing since IRR is 4.17%
d. Buying, since IRR is 9.29%
e. none of the above
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