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2. A new small truck is offered for sale for $16,00 month closed-end lease for $280 per month. If t kept for 6 years and it is expected to be sold leased there will be a $1,500 lease signing fee years and returned to the dealer with no cash truck will be leased with the same lease signin years, and at the end of that lease the truck will no cash payments. Draw the cash flows for the option. Find the effective interest rate per mor flows for each option over the 6-year period. A maintenance costs for these two options are ex

2. A new small truck is offered for sale for $16,00 month closed-end lease for $280 per month. If t kept for 6 years and it is expected to be sold leased there will be a $1,500 lease signing fee years and returned to the dealer with no cash truck will be leased with the same lease signin years, and at the end of that lease the truck will no cash payments. Draw the cash flows for the option. Find the effective interest rate per mor flows for each option over the 6-year period. A maintenance costs for these two options are ex

Advanced Engineering Mathematics
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
Problem 1RQ
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kept for 6 years and it is expected to be sold used for $4,000. If the truck leased there will be a $1,500 lease signing fee and it will be operated for 3 vears and returned to the dealer with no cash changing hands. Then a new truck will be leased with the same lease signing fee and operated for 3 more years, and at the end of that lease the truck will be returned to the dealer with no cash payments. Draw the cash flows for the purchase option and the lease option. Find the effective interest rate per month that gives equivalent cash flows for each option over the 6-year period. Assume that the operating and maintenance costs for these two options are expected to be the same.
Transcribed Image Text:kept for 6 years and it is expected to be sold used for $4,000. If the truck leased there will be a $1,500 lease signing fee and it will be operated for 3 vears and returned to the dealer with no cash changing hands. Then a new truck will be leased with the same lease signing fee and operated for 3 more years, and at the end of that lease the truck will be returned to the dealer with no cash payments. Draw the cash flows for the purchase option and the lease option. Find the effective interest rate per month that gives equivalent cash flows for each option over the 6-year period. Assume that the operating and maintenance costs for these two options are expected to be the same.
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Given Truck price = $16,000

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