Bart Simpson is trying to decide whether or not he should lease or buy a new viper. The viper can be leased for $10,000 per year (first payment made right now) for 10 years or he can buy the car outright for a cost of $65,000. Bart has located a bank that will lend him the $65000 at a cost of 15.75%. Bart will drive the car for 10 years and will abuse viper to the point that it will have no resale value. Bart also lives in a world of no uncertainty and pays no taxes.
What is Bart's present value of the lease payments?
A. $65,000 B. $48,786 C. $56,469 D. $63,282 E. None of the above
Barts implied interest rate in the lease payment is?
A. 10% B. 12.71% C. 8.71% D. 11.17% E. None of the above