A computer dealer offers (a) to lease a system to you for $50 per month for two years. At the end of two years, you have the option to buy the system for $500. You will pay at the end of each month. (b) He will sell the same system to you for $1,200 cash. If the going interest rate is 12%, which is the better offer (a) or (b)?
A computer dealer offers (a) to lease a system to you for $50 per month for two years. At the end of two years, you have the option to buy the system for $500. You will pay at the end of each month. (b) He will sell the same system to you for $1,200 cash. If the going interest rate is 12%, which is the better offer (a) or (b)?
Chapter19: Lease And Intermediate-term Financing
Section: Chapter Questions
Problem 14P
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Question
A computer dealer offers
(a) to lease a system to you for $50 per
month for two years. At the end of two years, you have the option to buy the system for $500. You will pay at the end of each month.
(b) He will sell the same system to you for $1,200 cash.
If the going interest rate is 12%, which is the better offer (a) or (b)?
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