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11.You have the option to eitheri) purchase a car outright for $ 20,000 or ii) lease the same model of car for five years at an annual cost of $ 5,500. If the car is purchased outright it will have a useful life of five years at the end of which it would be sold for scrap generating proceeds of $ 1,000. Based on equivalent annual cost and assuming r= 9%, which of the below statements is correct? A.Leasing the car would be $ 142 per year more expensive B.Purchasing the car outright would be $ 191 per year cheaper C.Leasing the car would be $ 500 per year more expensive D.Purchasing the car outright would be $ 525 per year cheaper

11.You have the option to eitheri) purchase a car outright for $ 20,000 or ii) lease the same model of car for five years at an annual cost of $ 5,500. If the car is purchased outright it will have a useful life of five years at the end of which it would be sold for scrap generating proceeds of $ 1,000. Based on equivalent annual cost and assuming r= 9%, which of the below statements is correct? A.Leasing the car would be $ 142 per year more expensive B.Purchasing the car outright would be $ 191 per year cheaper C.Leasing the car would be $ 500 per year more expensive D.Purchasing the car outright would be $ 525 per year cheaper

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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11.You have the option to eitheri) purchase a car outright for $ 20,000 or ii) lease the same model of car for five years at an annual cost of $ 5,500. If the car is purchased outright it will have a useful life of five years at the end of which it would be sold for scrap generating proceeds of $ 1,000. Based on equivalent annual cost and assuming r= 9%, which of the below statements is correct? A.Leasing the car would be $ 142 per year more expensive B.Purchasing the car outright would be $ 191 per year cheaper C.Leasing the car would be $ 500 per year more expensive D.Purchasing the car outright would be $ 525 per year cheaper
You have the option to either i) purchase a car outright for $20,000 or ii) lease the same model of car for five years at an annual cost of $5,500. If the car is purchased outright it will have a useful life of five years at the end of which it would be sold for scrap generating proceeds of $1,000. Based on equivalent annual cost and assuming r = 9%, which of the below statements is correct? Leasing the car would be $142 per year more expensive Purchasing the car outright would be $191 per year cheaper Leasing the car would be $500 per year more expensive O Purchasing the car outright would be $525 per year cheaper
Transcribed Image Text:You have the option to either i) purchase a car outright for $20,000 or ii) lease the same model of car for five years at an annual cost of $5,500. If the car is purchased outright it will have a useful life of five years at the end of which it would be sold for scrap generating proceeds of $1,000. Based on equivalent annual cost and assuming r = 9%, which of the below statements is correct? Leasing the car would be $142 per year more expensive Purchasing the car outright would be $191 per year cheaper Leasing the car would be $500 per year more expensive O Purchasing the car outright would be $525 per year cheaper
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