You are considering leasing a car that costs $25,000. The lease requires monthly payments of $500 forthe next 5 years, starting one month from today. The lease also allows you to buy the car for $8,000immediately after making the final lease payment. Your rich uncle, who hates leasing, offers to loan you the$25,000 at a 9% APR interest rate (i.e., 0.75% per month). Your uncle is so nice that he will allow you torepay the loan in full over the next 5 years in any way you choose. If you cannot deduct interest expense orcar depreciation on your tax return, should you accept your uncle’s generous offer?
I don’t think the answer on course hero is correct. My teacher says the answer is to take the uncle’s offer because with loan payments of $413 per month you are saving money