A graphic designer needs a laptop for audio/video editing, and noticesthat they can elect to pay $3,500 for a Dell XPS laptop, or lease from themanufacturer for monthly payments of $96 each for four years. Thedesigner can borrow at an interest rate of 10% APR compoundedmonthly. What is the cost of leasing the laptop over buying it outright?O A. Leasing costs $570 more than buying.B. Leasing costs $228 more than buying.OC. Leasing costs $342 more than buying.OD. Leasing costs $285 more than buying.

First we need to calculate present value of lease payments by using equation below. Where PMT=…

Answered: A graphic designer needs a laptop for…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter5: Making Automobile And Housing Decisions

Section: Chapter Questions

Problem 8FPE

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Evaluating financing packages. Assume that you’ve been shopping for a new car and intend to finance part of it through an installment loan. The car you’re looking for has a sticker price of $18,000. Custom Vehicles has offered to sell it to you for $3,000 down and finance the balance with a loan that will require 48 monthly payments of $333.67. However, a competing dealership will sell you the exact same vehicle for $3,500 down, plus a 60-month loan for the balance, with monthly payments of $265.02. Which of these two financing packages is the better deal?
After deciding to get a new car at Ehlert Motors, your options are to purchase it with a three-year loan or to lease it for three years. The car you wish to buy costs $38,600. the dealer has a special loan financing offer: if you make a 10% down payment, you qualify for a special 0.96% APR compounded monthly (much lower than the competitive market 3.6% APR compounded monthly). If you purchase the car with the loan, you expect to be able to sell it in 3 years for $22,000. If you lease the car, it has no residual value (you must turn it in at the end of the lease). To make you indifferent between purchasing and leasing, what would the present value of all lease payments need to be? Because we weren't given lease information, I believe we just need to calculate the PV of the purchasing option.
Meg O’Byte wants to buy a new computer for her business for Internetaccess on a cable modem. The computer system cost is $5,100. The cablecompany charges $200 (including the cable modem) for installation and hasa $50 a month usage fee for businesses, paid at the end of the month. Megexpects to buy the system with a $100 down payment, financing the balanceat 8 percent over the next 4 years. She will sell the computer for $1,000when she upgrades. She expects a $500 a month increase in cash flow and isin the 25 percent tax bracket.a. The start-up costs are __________________.b. The PVC is __________________.c. The PVB is __________________.d. The monthly payment for the computer is __________________.
Blush Inc., sold a kitchen appliance that costs $1,000.00 with 5-year financing to a customer who made a down payment of $510.00. What should be the size of the loan payments at the end of every month if interest of 9.00% compounded monthly is charged? You plan to save money for a down payment of $39,000 to purchase an apartment. You can only afford to save $6,000 at the end of every 6 months into an account that earns interest at 4.25% compounded monthly. How long will it take you to save the planned amount?
It’s time to get a new laptop that is $2500. If you save up for it each month it will take one year in an account that earns 5% annual interest. (A)How much would you have to put aside each month to have enough for it? (B)What are the total acquisition costs of saving up for the laptop? use the PVPN AND NO EXCEL ANSWERS
Many individuals prefer to lease their vehicles rather than buy them. A new Audi Q7 can be leased for a down payment of $5,000 and 36 end-of-the-month payments for $699. Alternately, the car can be purchased for cash for $52,000 and a Q7 with about 40,000 miles is estimated to have resale value of $26,000 in three years from now. Should one lease or buy if opportunity cost is 5.16% APR? Show all your work.
An electronics retailer is offering a deferred payment plan. A customer can buy a laptop today for no money down, followed by 12 monthly payments of $145, with the first payment due in 1 year from date of purchase. If the retailer is building in a rate of return of 12% compounded monthly, what is the purchase price of the laptop that was financed?
A car dealer leases a small computer with software for $5000 per year. As an alternative he could buy the computer for $7500 and lease the software for $3500 per year. Any time he would decide to switch to some other computer system he could cancel the software lease and sell the computer for $500. (a) If he buys the computer and leases the software, what is the payback period? (b) If he kept the computer and software for 8 years, what would be the benefit–cost ratio, based on a 5% interest rate?
Kimberly Jensen of Storm Lake, Iowa, wants to buy some living room furniture for her new apartment. A local store offered credit at an APR of 16 percent, with a maximum term of four years. The furniture she wishes to purchase costs $3,600, with no down payment required. 1. What are the total finance charges over that three-year period? Round your answer to the nearest dollar. 2. How would the payment change if she could afford a down payment of $600 with four years of financing? Round your answer to the nearest cent.
A college freshman wants to buy a new notebook computer and a printer. The total cost of the two, including shipping and tax, is $1,803. The system can be financed with no down payment at an annual interest rate of 15.8% for 1 year. What is the monthly payment for the loan?
You own a video store and are considering two alternative ways of making home deliveries to your customers. The first is to buy a car for $ 15,000 and pay a part-time employee $ 4,000 a year to deliver the videos. The other is to hire a service. The service will cost $ 6,000 a year. Assuming that the car will have a life of 6 years and that both employee salary and the service costs will increase 3% a year in perpetuity, which alternative is the more economical one? The firm has a cost of capital of 10%. (You can assume no taxes or depreciation) Answer depends on your assumptions regarding the cashflow patterns.
You are buying a new car, and you plan to finance your purchase with a loan you will repay over 48 months. The car dealer offers two options: either dealer financing with a low APR, or a $2500 rebate on the purchase price. If you use dealer financing, you will borrow $13,000 at an APR of 3.9%. If you take the rebate, you will reduce the amount you borrow to $10,500, but you will have to go to the local bank for a loan at an APR of 8.87%. To answer the first question below, you may need the following formula, where M is your monthly payment, in dollars, if you borrow P dollars with a term of 48 months at a monthly interest rate of r (as a decimal), and r = APR/12. M = Pr(1 + r)48 (1 + r)48 − 1 Should you take the dealer financing or the rebate? dealer financingrebate How much will you save over the life of the loan by taking the option you chose? (Round your answer to the nearest cent.)$

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