s 5 Points An eh or purchase one for 8500 now and pay a 75 p

s (5 Points) An eh or purchase one for $8500 now and pay a $75 per month maintenance tee. interes ineering practitioner can lease a fully equipped computer and color printer system for $800 per trate is 15% per year compounded monthly, determine the period in months ouse neeswy if the noninal the two to break even.

Solution

solution:- if the computter is taken on lease than the present value of lease rentals for the 13 months shall be as follows:-

annual lease amount * present value annuity factor(15%/12,13)

800*11.93

=$9544

if the computer is taken on immediate payment and maintenance fees is paid annually

present value of maintenance fees shall be as follows:-

annual fee amount* present value annuity factor(15%/12,13)

75*11.93

=894.75

add: initial cost of computer =8500

total present value =8500+894.75=9394

during the period of 13 months , cost of both proposals coming out to be nearly same.