Lease-versus-purchase decision Personal Finance Problem Joanna Browne is considering either leasing or purchasing a new

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Lease Versus Purchase Decision Personal Finance Problem Joanna Browne Is Considering Either Leasing Or Purchasing A New 1 (106.43 KiB) Viewed 10 times

Lease-versus-purchase decision Personal Finance Problem Joanna Browne is considering either leasing or purchasing a new Chrysler Sebring convertible that has a manufacturer's suggested retail price (MSRP) of $33,400. The dealership offers a 3-year lease that requires a capital payment of $3,375 ($3,025 down payment + $350 security deposit) and monthly payments of $505. Purchasing requires a $2,650 down payment, sales tax of 6.5% ($2,171), and 36 monthly payments of $914. Joanna estimates the value of the car will be $17,000 at the end of 3 years. She can earn 4.6% annual interest on her savings and is subject to a 6.5% sales tax on purchases. Make a reasonable recommendation to Joanna using a lease-versus-purchase analysis that, for simplicity, ignores the time value of money. a. Calculate the total cost of leasing. b. Calculate the total cost of purchasing. c. Which should Joanna do?