MATH126 Week 1 Written Assignment

Question: #479

Emma runs a small factory that needs a vacuum oven for brazing small fittings. She can purchase the model she needs for $180,000 up front, or she can lease it for $4,200 per month. She can borrow at 7% APR, compounded monthly. Assuming that the oven will be used for 5 years, should she purchase the oven or should she lease it?

a. buy, since PV of the lease is $32,108 more than the cost of the oven
b. lease, since the PV of the lease is $2,212 less than the cost of the oven
c. lease, since the PV of the lease is $12,224 less than the cost of the oven
d. lease, since the PV of the lease is $8,642 less than the cost of the oven

Solution: #498

MATH126 Week 1 Written Assignment

MATH 126 week 1 ...