You have accepted your first job in Calgary. You are told it is a three-year contract and you have to decide to purchase a condominium or lease an apartment. You can buy a one-bedroom condominiumfor $170,000 and believe the resale value will be $185,000. Monthly condo fees will cost $750, payable at the start of every month. The other option is to lease an apartment for $1,500 per month, allutilities included. Should you rent or buy the condo if mortgage rates are 4.5% compounded semiannually?Multiple ChoiceOOOOBuying can save $14,598Leasing can save $19,401Leasing can save $17,578Buying can save $14,201Buying can save $17,201

Monthly fee=$750Period=3yearsMonthly lease=$1500Purchase price=$170000Selling price=$185000

You have accepted your first job in Calgary. You are told it is a three-year contract and you have to decide to for $170,000 and believe the resale value will be $185,000. Monthly condo fees will cost $750, payable at the utilities included. Should you rent or buy the condo if mortgage rates are 4.5% compounded semiannually? Multiple Choice Buying can save $14,598 Leasing can save $19,401 Leasing can save $17,578 Buying can save $14,201

You have accepted your first job in Calgary. You are told it is a three-year contract and you have to decide to for $170,000 and believe the resale value will be $185,000. Monthly condo fees will cost $750, payable at the utilities included. Should you rent or buy the condo if mortgage rates are 4.5% compounded semiannually? Multiple Choice Buying can save $14,598 Leasing can save $19,401 Leasing can save $17,578 Buying can save $14,201

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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After deciding to acquire a new car, you can either lease the car or purchase it with a three-year loan. The car you want costs $37,000. The dealer has a leasing arrangement where you pay $2,400 today and $580 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at an APR of 6 percent. You believe that you will be able to sell the car for $22,000 in three years. a. What is the present value of leasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the present value of purchasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What break-even resale price in three years would make you indifferent between buying and leasing?
After deciding to buy a new car, you can either lease the car or purchase it on a three- year loan. The car you wish to buy costs $35,000. The dealer has a special leasing arrangement where you pay $99 today and $499 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at a 6 percent APR. You believe you will be able to sell the car for $23,000 in three years. What break-even resale price in three years would make you indifferent between buying and leasing? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Break-even sale price What is the present value of purchasing the car? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) $ Present value
After deciding to acquire a new car, you realize you can either lease the car or purchase it with a two-year loan. The car you want costs $34,000. The dealer has a leasing arrangement where you pay $97 today and $497 per month for the next two years. If you purchase the car, you will pay it off in monthly payments over the next two years at an APR of 6 percent. You believe that you will be able to sell the car for $22,000 in two years. What is the present value of purchasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value of lease $ What is the present value of leasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value of purchase $ What break-even resale price in two years would make you indifferent between buying and leasing? (Do not round intermediate calculations and round your answer to 2…
After deciding to buy a new car, you can either lease the car or purchase it on a three-year loan. The car you wish to buy costs $35,000. The dealer has a special leasing arrangement where you pay $99 today and $499 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at a 6% APR. You believe you will be able to sell the car for $23,000 in three years. All final answers are rounded to the nearest dollar. Choose all correct statements from the below. Question 6 options: If you sell the car after three years, the PV of purchasing the car is $15,780. Purchasing is always preferable if the APR is below 6%. The PV of leasing the car is $17,502. If the APR increases to 8.4%, you should lease the car. You should lease the car given that the PV of leasing is higher.
After deciding to get a new car, you can either lease the car or purchase it with a three-year loan. The car you wish to buy costs $39,500. The dealer has a special leasing arrangement where you pay $108 today and $508 per month for the next three years. If you purchase the car, you will pay it off in monthly payments over the next three years at an APR of 6 percent, compounded monthly. You believe that you will be able to sell the car for $27,500 in three years. What is the cost today of purchasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Cost of purchasing $ What is the cost today of leasing the car? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Cost of leasing S What break-even resale price in three years would make you indifferent between buying and leasing? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Break-even…
You are a real estate owner in Bloomington Indiana and you have rented a house to students. You expect to make 9% per year on this leasehold investment. The terms of the lease are $2800/month for 24 months and the rent is due at the beginning of the month. Your savvy renters are Kelley students and they request that the rent be paid, instead, at the end of the month. How much more valuable is the lease contract to you if payments are made at the beginning of the month rather than the student's proposed payments at the end of the month? Multiple Choice O O $2446.07 $459.67 $162.67 $1408.49 $1800
You have to buy a new copier. The cost of the copier is $1,900, plus $415 per year in maintenance costs. The copier will last for five years. Alternatively, a local company offers to lease the copier to you and do the maintenance as well. If your discount rate is 6.5%, what is the most you would be willing to pay per year to lease the copier (your first lease payment is due in one year)? (Select the best choice below.) A. The most you would be willing to pay per year to lease the copier is $415. B. The most you would be willing to pay per year to lease the copier is $3,624.61. C. The most you would be willing to pay per year to lease the copier is $872.21. D. The most you would be willing to pay per year to lease the copier is $1,900.
You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. Thesign will cost $4,300 and will be posted for one year. You expect that it will generate additionalrevenue of $817 a month. What is the payback period?
You are interested in a new Ford Taurus. After visiting your Ford dealer, doing your research on the best leases available, you have three options. (i) Purchase the car for cash and receive a $1,900 cash rebate from Dealer A. The price of the car is $19,000. (ii) Lease the car from Dealer B. Under this option, you pay the dealer $550 now and $225 a month for each of the next 36 months (the first $225 payment occurs 1 month from today). After 36 months you may buy the car for $10,900. (iii) Purchase the car from Dealer C who will lend you the entire purchase price of the car for a zero interest 36-month loan with monthly payments. The car price is $19,000. Suppose the market interest rate is 4%. What is the net cost today of the cheapest option?
EXERCISE 2: LEASING VERSUS BUYING You have two options: to buy or to lease a video store. Option 1: Purchase Year $300,000 80,000 Cost Additional cost Cash flow from operations Cash flow from operations Cash flow from operations Cash flow from operations Cash flow from operations Cash flow from operations Cash flow from operations Cash flow from operations Cash flow from operations Cash flow from operations 1 45,000 70,000 1 90,000 105,000 140,000 3 4. 6. 160,000 165,000 170,000 175,000 180,000 10 11 Cash flow from sale of business 400,000 If you want to make 25% on your money, should you buy the video store? To answer this question, calculate the following: 1. Net present value 2. Internal rate of return Option 2: Leasing Activate Go to Settin
You are assiting a newly hired employee. You begin explaning the process of utilizing excel to finance properties. Consider the following. A realator has a house on sale for $640,000. If possible you believe you can finance the home for $300,000 for 20 years at a 3% interest rate. What would the monthly principle and interest payment be for the acquird loan? Calculate using the PV funtion in excel. How would you caluclate this in Excel using the PV function? Rate: Nper: Pmt: FV: Type:
You are considering either leasing or purchasing a car. You notice an ad that says you can lease the car you want for $229.00 per month. The lease term is 48 months with the first payment due at inception of the lease. You must also make an additional down payment of $1,120. The ad also says that the residual value of the vehicle is $12,760. The list price of the vehicle is $20,274, but after much research, you have concluded that you could buy the car for a total "drive-out" price of $18,600. What is the quoted annual interest rate you are actually paying with the lease? 10.23% 10.38% 7.21% 7.11% 8.22%

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