Jack decides to buy a car. He can either lease the car orpurchase it with a three year loa
Jack decides to buy a car. He can either lease the car orpurchase it with a three year loan. The car he wishes to buy costs$45,000. The dealer has a special leasing arrangement where he pays$1 today and $650 per month at the beginning of each month for thenext three years. If he purchases the car, he will pay it off inmonthly payments over the next three years at an 10% percent annualpercentage interest rate (APR) with monthly compounding. He alsobelieves that he will be able to sell the car for $30,000 in threeyears
Question 2: What break-even resale price in three years wouldmake him indifference between buying and leasing?