CMS Express has historically owned and maintained its own delivery trucks. Leasing is an option being seriously considered because costs for maintenance, fuel, insurance, and some liability issues will be transferred to United Leasing, the truck leasing company. The study period is no more than 24 months for either alternative. The annual lease cost is paid at the beginning of each year and is not refundable for partially used years.

Purchase: P  $30,000 now; monthly cost 

$1200; monthly revenue  $4500 Lease: P  $10,000 at the beginning of each year (months 0 and 12); monthly cost  $2800; monthly revenue  $4500

a. Use the first cost and net cash flow estimates to determine the payback in months with a nominal 9% per year return for the purchase and lease options.

b. Spreadsheet question: Write the single-cell NPER function, including the optional “type”

entry, that will display payback for the lease option, where lease costs are paid at the beginning of the year. Explain how you developed the function.