Question
Derek, an office administrator, is evaluating the following quotation that she received for the purchase of a printer for her office: Lease Option: Make payments
Derek, 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 $4,200 immediately.
a. What is the present value of the lease option if money is worth 7.2% compounded semi-annually?
Round to the nearest cent
b. Which option would be economically better?
(click to select)Purchase OptionLease Option
c. What is the present value of the lease option if money is worth 8.4% compounded semi-annually?
Round to the nearest cent
d. Which option would be economically better?
Purchase Option or Lease Option?
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