Question

An animator needs a laptop for audio/video editing, and notices that he can pay $2600 for a Dell XPS laptop, or lease from the manufacturer for monthly payments of $75 each for four years. The designer can borrow at an interest rate of 14% APR compounded monthly. What is the cost of leasing the laptop over buying it outright

Answer 1

C) Leasing costs $145 more than buying

Step-by-step explanation:

Calculation for the cost of leasing the laptop over buying it outright

First step is to get find the Present value (PV) using financial calculator

Rate =1.17% ( ⁴ 14% ÷ 12 months)

NPER=48 months ( 4 years × 12 month)

PMT=$75

FV=$0.00

Hence,PV will be :.

PV=$2,744.59

Now let calculate the cost of leasing

Cost of leasing= $2,744.59 - $2,600

Cost of leasing= $144.59

Cost of leasing=$145 Approximately

Therefore the cost of leasing the laptop over buying it outright will be $145