Suppose a company owns a fancy 3D printer which costs $1500 to buy. The printer depreciates $200 per year.

(a) If the interest rate is 3 percent, what is the implicit rental price of the printer per year?

(b) Does your answer to part (a) depend on whether the company used its own money to buy the printer, or if it took out a loan? Why?

Suppose a newer edition of the 3D printer comes out for $2000. Because better technology is used, there is less depreciation; it only depreciates by $150 a year.

(c) Calculate the implicit rental price for the new edition of the printer. Which edition of the printer - old or new - has a larger implicit rental price?

(d) Suppose the interest rate was instead 5 percent, rather than 3 percent. Which edition of the printer - old or new - has a larger implicit rental price? Compare your answer with part (c), and comment on any difference.