Problem
Design and make workbook to compare the purchase versus lease of an automobile. The car you wish to purchase is $18,400. Your monthly net income (after taxes) is $3,024. You need to decide whether to lease the car over three years or buy the car with the aid of a bank loan for $18,400. Design your solution using Excel. Format your workbook attractively and appropriately based on the principles learned in this course. You may need to use the function wizard to explore functions. Be sure your calculations support your conclusions.
The following information is provided:
1. If you were to lease the vehicle with zero down, the lease payment would be $355 per month. At the end of the three years, there is an option to buy the vehicle for $12,000. What would be the total cost to own the vehicle at the end of three years?
2. If you were to purchase the vehicle with the aid of a bank loan with zero down for three years (interest rate is 7%), what would your monthly payment be? What would be the total cost to own the vehicle at the end of three years?
3. How much would you pay, over and above the price of the vehicle, for each option?
4. What do you recommend as the best financial alternative: lease or purchase? If you were to be in this situation right now, which would you pick and why? What other factors would you consider in your decision OTHER THAN cost?