Jasmine, an office administrator, was evaluating the following quotation that she received for the purchase of a printing machine for her company: Lease Option: Make a down payment of $1000, and lease payments of $750 at the beginning of every month for two years. At the end of two years, pay $3000 to own the printer. Purchase Option: Make a payment of $20,500 immediately. The cost of borrowing is 6% compounded semi-annually.

a. Which option is economically better for the company?

b. In the lease option, what will be the buyback value of the printer at the end of one year?

AppendixLO1