Ariel, an office administrator, is evaluating the following quotation that she received for the purchase of a printer for her office:

Lease Option: Make payments of $85 at the beginning of every month for 4 years. At the end of 4 years, make the final payment of $750.

Purchase Option: Make a payment of $3,850 immediately.

1)What is the present value of the lease option if money is worth 7.8% compounded semi-annually?

2)Which option would be economically better?

3) What is the present value of the lease option if money is worth 10.8% compounded semi-annually?

4) Which option would be economically better?