Question

Should Edison lease or purchase? Edison is considering the purchase of a Ford F-150 Pickup and has negotiated a final price of $27,690. He’s trying to decide whether to lease or purchase the vehicle. • If he leases, he’ll have to pay a $500 security deposit, a capital cost reduction (down payment) equal to 10% of the vehicle’s cost, and monthly payments of $375 over the four-year term of the closed-end lease. The truck will have a residual value of $11,076. • On the other hand, if he buys the truck, he’ll have to make a 10% down payment, pay sales tax equal to 7% of the vehicle’s price, and make monthly payments of $563 on a four-year loan that charges 4% interest. • Be aware that funds used as down payments and security deposits incur an opportunity cost of 5%, as they could have earned interest for Edison over the period of the lease or loan.

          Should Edison lease or purchase?
Edison is considering the purchase of a Ford F-150 Pickup and has negotiated a final price of $27,690. He’s trying to decide whether to lease or purchase the vehicle.
• If he leases, he’ll have to pay a $500 security deposit, a capital cost reduction (down payment) equal to 10% of the vehicle’s cost, and monthly payments of $375 over the four-year term of the closed-end lease. The truck will have a residual value of $11,076.
• On the other hand, if he buys the truck, he’ll have to make a 10% down payment, pay sales tax equal to 7% of the vehicle’s price, and make monthly payments of $563 on a four-year loan that charges 4% interest.
• Be aware that funds used as down payments and security deposits incur an opportunity cost of 5%, as they could have earned interest for Edison over the period of the lease or loan.

Added by Kimberly R.

Question

Please give Ace some feedback