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You have just started your first job and you want to have the basic appliances (fridge, washer, dryer, etc.) in your apartment. You face the

You have just started your first job and you want to have the basic appliances (fridge, washer, dryer, etc.) in your apartment. You face the following choices: (i) Purchase all appliances at the store using a bank loan. There is no down payment as the bank can take your appliances if you default on the loan. The loan is at the annual market rate of 6%, and the loan amount is $5,300 to be repaid monthly over 4 years. (ii) Rent-to-buy from the same store. The monthly rental is $110 for 48 months and then you pay $800 to own all the appliances. What is the net cost today of the cheapest option?

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