Ross et al.: Fundamentals
of Corporate Finance, Sixth
Edition, Alternate EditionVIII. Topics in Corporate
Finance(^906) 26. Leasing © The McGraw−Hill
Companies, 2002
CHAPTER 26 Leasing 883
A major financial decisionfor many of you will be whether to buy
or lease a new car. We went to http://www.kiplinger.comand looked under the
“More calculators” link to find a lease versus buy calculator. We analyzed a
new car purchased for $28,500 on a 60-month loan at 6.9 percent and a
$2,000 down payment. To lease the same car for three years requires a $500 monthly
payment with a $1,500 upfront payment and a $1,000 security deposit. We assumed
that the depreciation on the car would be average. Below you will see the informa-
tion we entered.
And the results? Here they are:
As you can see, in this example, the better choice financially is to buy the car since it
will cost $5,854 per year compared to the $6,183 annual cost if you lease.
Work the Web