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Depreciation and the decision to lease vs. buy

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Give an example of the effect depreciation has on the decision to lease vs. buy? How is this related to the decision to buy vs. lease? Why?

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Solution Summary

An example of the effect depreciation has on the decision to lease vs. buy is give. How depreciation is related to the decision to buy vs. lease explained.

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Buying a car with a loan is essentially like putting money into a declining-value savings account - you never get out as much as you put in. A portion of every payment you make is lost to depreciation and finance charges. What you have "to show" for your investment when your loan is paid off is only the part that is left over after depreciation and interest. A terrible investment ...

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