Kristen, 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 3 years. At the end of 3 years, make the final payment of $1,250.

Purchase Option: Make a payment of $3,750 immediately.

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

b. Which option would be economically better

c. What is the present value of the lease option if money is worth 9.6% compounded semi-annually?

d. Which option would be economically better?