Question
Ronald, an office administrator, is evaluating the following quotation that she received for the purchase of a printer for her office: Lease Option: Make payments
Ronald, 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 $80 at the beginning of every month for 5 years. At the end of 5 years, make the final payment of $1,500.
Purchase Option: Make a payment of $5,100 immediately.
a. What is the present value of the lease option if money is worth 6.3% compounded semi-annually?
b. Which option would be economically better?
Purchase Option or Lease Option?
c. What is the present value of the lease option if money is worth 9% compounded semi-annually?
d. Which option would be economically better?
Purchase Option Lease Option
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