24. Your car dealer is willing to lease you a new car for $245 a month for 48 mo

Question

24. Your car dealer is willing to lease you a new car for $245 a month for 48 months Payments are due on the first day of each month starting with the day you sign the lease contract. If your cost of money is 6.5 percent, what is the current value of the lease? [4pts] A. $10,331.03 B. $10,386.99 C. $12,197.74 D. $12,203.14 E. $13,008.31 25.Marley Woods Resort would like to buy some land and build a luxury living center. The anticipated total cost is $20.5 million. The CEO of the firm is quite conservative and will only do this when the company has sufficient funds to pay cash for the entire construction project. Management has decided to save $1.2 million a quarter for this purpose. The firm earns 6.25 percent, compounded quarterly, on the funds it saves. How long does the company have to wait before expanding its operations? [4pts] A. 3.09 years B. 3.82 years C. 4.46 years D. 4.82 years E. 4.91 years

Explanation / Answer

Solution:

24) Calculation of the Current Value of the Lease:

Annuity Due PVA = PMT + PMT [(1+r)n-1 - 1] / [r (1+r)n-1]

PMT = 245

n = 48

r = 6.5 % / 12 = 0.54167% = 0.0054167

PVA = 245 + 245 * [(1+ 0.0054167)47 - 1] / [0.0054167 (1+ 0.0054167)47] }

PVA = $10,386.99

Current value of lease = $10,386.99.

As per Chegg guideline i have answered first question. please upload another one as seperate question.

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