What is the present value of the lease option

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Question - Jordan, an office administrator, is evaluating the following quotation that he received for the purchase of a printer for his office:

Lease Option: Make payments of $85 at the beginning of every month for 3 years. At the end of 3 years, make the final payment of $500.

Purchase Option: Make a payment of $3,300 immediately.

Please note that my question relates to Mathematics of Business and Finance.

a. What is the present value of the lease option if money is worth 6.3% compounded semi-annually?

b. Which option would be economically better?

i. Purchase Option

ii. Lease Option

c. What is the present value of the lease option if money is worth 8.7% compounded semi-annually?

d. Which option would be economically better?

i) Purchase Option

ii) Lease Option

Reference no: EM132929055

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