Your landscaping company can lease a truck for 8700 a year, Ask an Expert

Finance

Your landscaping company can lease a truck for $8,700 a year (paid at year-end) for 7 years. It can instead buy the truck for $46,000. The truck will be valueless after 7 years. The interest rate your company can earn on its funds is 8%.

a. What is the cost of leasing? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value of lease $

b. Is it cheaper to buy or lease?

Buy

Lease

c-1. What if the lease payments are an annuity due, so the first payment comes immediately? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value of lease $

c-2. Is it cheaper to buy or lease?

Buy

Lease

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92769338

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