Your landscaping company can lease a truck for $8,700 a year (paid at year-end) for 7 years. It can instead buy the truck for $46,000. The truck will be valueless after 7 years. The interest rate your company can earn on its funds is 8%.
a. What is the cost of leasing? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Present value of lease $
b. Is it cheaper to buy or lease?
Buy
Lease
c-1. What if the lease payments are an annuity due, so the first payment comes immediately? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Present value of lease $
c-2. Is it cheaper to buy or lease?
Buy
Lease