Frequentlywe read in the newspaperthat oneshouldlease a
Chapter , Problem 8-37(choose chapter or problem)
Frequentlywe read in the newspaperthat oneshouldlease a car rather than buying it. For a typical 24- month lease on a car costing $9400, the monthlylease charge is about $267. At the end of the 24months, the car is returned to the lease company(which owns the car). As an alternative, the samecar could be bought with no down payment and24 equal monthly payments, with interest at a 12%nominal annual percentage rate. At the end of 24months the car is fully paid for. The car would thenbe worth about half its original cost.(a)Over what range of nominal before-tax interestrates is leasing the preferred alternative?(b)What are some of the reasons that would makeleasing more desirable than is indicated in (a)?
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