General Motors advertised three alternatives for a 25-month lease on a new Blaze
ID: 2353833 • Letter: G
Question
General Motors advertised three alternatives for a 25-month lease on a new Blazer: (1) zero dollars down and a lease payment of $1,750 per month for 25 months, (2) $5,000 down and $1,500 per month for 25 months, or (3) $38,500 down and no payments for 25 months. (Use Table B.3)
Calculate the total present value of lease payments under the three alternatives (assume the annual interest rate is 12% compounded monthly). (Round "PV Factor" to 4 decimal places and final answers to the nearest dollar amount. Omit the "$" sign in your response.)
Total present value:
Option 1 = $
Option 2 = $
Option 3 = $
What is the amount for each of the Options?
Explanation / Answer
so the present values calculated from the table rate =12 % option 1 1750/month for 25 months hence NPV =1750(7.8431)=13725.425$ option 2 5000 down + 1500/month for 25 months NPV = 5000 + 1500(7.8431) =16764.75$ option 3 38500$ cheers :)
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