Your landscaping company can lease a truck for $7,200 a year (paid at year-end) for 6 years. It can instead buy the truck for $35,000. The truck will be valueless after 6 years. The interest rate your company can earn on its funds is 7%.
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.