# engr econ buy v. lease - \$2,000 Total (future): \$15,246.37...

This preview shows page 1. Sign up to view the full content.

Olivia Nixon Engineering 111 26-Feb-10 Engineering Economics Homework Buy vs. Lease of a New Chevy Camaro for 5 years Constant Conditions: Cost: \$25,000 Interest rate: 4% annually Monthly lease payment: \$200 Up front Payment: \$2,000 "What If" #1: Salvage Value = \$15,000 BUY Present Cost: Future cost: \$25,000 \$30,464.13 Salvage Value \$15,000 Total: \$15,464.13 LEASE Monthly payment (\$200) + Down Payment fv = \$13,246.37 \$2,000 Total (future): \$15,246.37 "What If" #2: Salvage Value = \$16,000 BUY Present Cost: Future cost: \$25,000 \$30,464.13 Salvage Value \$16,000 Total: \$14,464.13 LEASE Monthly payment (\$200) + Down Payment fv = \$13,246.37
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: \$2,000 Total (future): \$15,246.37 &quot;What If&quot; #3: Salvage Value = \$17,000 BUY Present Cost: Future cost: \$25,000 \$30,464.13 Salvage Value \$17,000 Total: \$13,464.13 LEASE Monthly payment (\$200) + Down Payment fv = \$13,246.37 \$2,000 Total (future): \$15,246.37 This analysis of buy vs. lease of a car shows that the only time leasing a new Chevy Camaro will cost less than buying the car is when the salvage value is \$15,000. At this salvage value, the savings will only be \$217.76. Therefore if the salvage value is less than \$15,000, it is more logical to lease rather than buy....
View Full Document

## This note was uploaded on 12/05/2011 for the course ENGR 111 taught by Professor Cardinal during the Winter '08 term at Cal Poly.

Ask a homework question - tutors are online