You are considering whether to buy or lease a car.

If you lease, you have to pay a refundable security deposit of $7 hundred, and a monthly lease payment of $492 for 4 years, with payments due at the beginning of the month.

If you buy, you will pay a down payment of $26 hundred, and a monthly loan payment of $573, over the same period of time, with payments due at the end of the month. The car is estimated to have a residual value of $6 thousand at the end of this time.

If the appropriate discount rate is 7.8 percent, what is the relative benefit of buying as opposed to leasing?

Hint: find the present value of all the buy cash flows, and subtract the present value of all the lease cash flows.