Question

Q.3 Your landscapping company can lease a truck for $8,000 a year(paid at year-end) for six...

Q.3 Your landscapping company can lease a truck for $8,000 a year(paid at year-end) for six years. It can instead buy the truck for $40,000. The truck will be valueless after six years. If the interest rate you company can earn on its funds is 7%, is it cheaper to buy or lease?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Since PV of future lease payment is less than cost to buy now, Option to Lease is better.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Q.1 You deposit $1,000 in your bank account. If the bank pays 4% compounded interest, how...
Q.1 You deposit $1,000 in your bank account. If the bank pays 4% compounded interest, how much will you accumulate in your account after 10 years? What if the bank pays interst on semi-annual basis? Q.2 If you earn 6% per year on your bank account, how long will it take an account with $100 to double to $200? Q.3 Your landscapping company can lease a truck for $8,000 a year(paid at year-end) for six years. It can instead buy...
You need a truck, which you can either buy or lease. You can buy the truck...
You need a truck, which you can either buy or lease. You can buy the truck for $45,000 and sell it after 6 years for $8,000. What is the maximum amount that you would pay per year to lease rather than to buy if the discount rate is 8 percent per year? Assume that the lease payments are annual and payable at the beginning of each year
You need a truck, which you can either buy or lease. You can buy the truck...
You need a truck, which you can either buy or lease. You can buy the truck for $45,000 and sell it after 6 years for $8,000. What is the maximum amount that you would pay per year to lease rather than to buy if the discount rate is 8 percent per year? Assume that the lease payments are annual and payable at the beginning of each year. Select one: a. $7,959 b. $8,003 c. $8,643 d. $8,789 e. $8,223
A firm can lease a truck for 4 years at a cost of $43,000 annually. It...
A firm can lease a truck for 4 years at a cost of $43,000 annually. It can instead buy a truck at a cost of $93,000, with annual maintenance expenses of $23,000. The truck will be sold at the end of 4 years for $33,000. a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 10%? Do not use excel. So your work! b. Which is the better option? Buy or Lease
Suppose you can buy a new car for $15,000 and sell it for $6,00 after six...
Suppose you can buy a new car for $15,000 and sell it for $6,00 after six years. Or, you can lease the car to $300 per month for three years and return it at the end of the three years. Assume that lease payments are made yearly instead of monthly (i.e., are $3,600 per year for each of the three years). a.) If the interest rate, r, is 4 percent, should you lease or buy? b.) What if the interest...
A firm can lease a truck for 4 years at a cost of $38,000 annually. It...
A firm can lease a truck for 4 years at a cost of $38,000 annually. It can instead buy a truck at a cost of $88,000, with annual maintenance expenses of $18,000. The truck will be sold at the end of 4 years for $28,000. a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 16%? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Deutsche Transport can lease a truck for four years at a cost of €49,000 annually. It...
Deutsche Transport can lease a truck for four years at a cost of €49,000 annually. It can instead buy a truck at a cost of €99,000, with annual maintenance expenses of €29,000. The truck will be sold at the end of four years for €30,000. Ignore taxes. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 12%? Which is the better option: leasing or buying?
Deutsche Transport can lease a truck for four years at a cost of €35,000 annually. It...
Deutsche Transport can lease a truck for four years at a cost of €35,000 annually. It can instead buy a truck at a cost of €85,000, with annual maintenance expenses of €15,000. The truck will be sold at the end of four years for €23,000. Ignore taxes. a. What is the equivalent annual cost of buying and maintaining the truck if the discount rate is 12%? b. Which is the better option: leasing or buying?
You have a lease that will cost you $8,000 next year, increasing at 3% a year...
You have a lease that will cost you $8,000 next year, increasing at 3% a year (the forecasted inflation rate) for 3 additional years (4 years total). If discount rates are 10% what is the present value cost of the lease?
You are deciding whether you want to buy or lease a car that is worth $13,000....
You are deciding whether you want to buy or lease a car that is worth $13,000. Its residual value after 2 years is $8,000, and after 4 years only $4,500. Assume an interest rate of 4.5% compounded monthly. If you take out a 4-year lease, what will be the monthly lease payment?...If you take out a 2-year lease, what will be the monthly lease payment?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT