The lease on the premises occupied by the accounting firm of Heath and Company will soon expire. The current landlord is offering to renew the lease for seven years at $2100 per month. The developers of a new building, a block away from Heath's present offices, are offering the first year of a seven year lease rent-free. For the subsequent six years the rent would be $2500 per month. All rents are paid at the beginning of each month. Other things being equal, which lease should Heath accept if money is worth 7.5% compounded monthly, and how much will they save by doing so?

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