The newtons new car decision-lease versus purchase

Assignment Help Financial Management

Reference no: EM131453430

The Newtons New Car Decision: Lease versus Purchase

Farrah and Same Newton, a dual-income couple in their late 20s, want to replace their seven-year-old car, which has 90,000 miles on it and needs some expensive repairs. After reviewing their budget, the Newtons conclude that they can afford auto payments of not more than $350 per month and a down payment of $2,000. They enthusiastically decide to visit a local dealer after reading its newspaper ad offering a closed-end lease on a new car for a monthly payment of $245. After visiting with the dealer, test-driving the car, and discussing the lease terms with the salesperson, they remain excited about leasing the car but decide to wait until the following day to finalize the deal. Later that day, the Newtons begin to question their approach to the new car acquisition process and decide to reevaluate their decision carefully.

1. What are some basic purchasing guidelines that the Newtons should consider when choosing which new car to buy or lease? How can they find the information they need?

2. How would you advise the Newtons to research the lease-versus-purchase decision before visiting the dealer? What are the advantages and disadvantages of each alternative?

Reference no: EM131453430

Questions Cloud

What it expects to learn from the cooperative arrangement : determine how much information a firm is obliged to tell a potential strategic alliance partner about what it expects to learn from the cooperative arrangement.

Present value of the cash flows from your lottery winnings : What is the present value of the cash flows from your lottery winnings?

Application of capital budget analysis : During week 6 we develop the theory and application of capital budget analysis. you believe most likely to contribute to capital project analysis failure.

What is the coupon rate on the investment : A Concrete Testing Laboratory borrowed $80,000 for new equipment at 8% per year compound quarterly. what is the coupon rate on the investment?

The newtons new car decision-lease versus purchase : What are some basic purchasing guidelines that the Newtons should consider when choosing which new car to buy or lease? How can they find information they need.

Five years as a safety net for recessionary periods : A man decides to save $1, 500 at the end of every month for the next five years as a safety net for recessionary periods.

Decided to save some money at the end of every year : You have decided to save some money at the end of every year for the next three years. How much do you expect to have at the end of three years?

Using damodaran preferred country risk premium model : Using Damodaran's preferred country risk premium model, find the percentage change in price.

How to realize certain profit via covered interest arbitrage : Show how to realize a certain profit via covered interest arbitrage, assuming that you want to realize profit in terms of U.S. dollars.

User Account

All Pages