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    Lease versus Purchase

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    Danny is considering buying a new computer. The computer is $2,090.00. Should Danny purchase it outright, or lease it?

    A purchase would be done via credit card, financed at 15%, with payments of 100 dollars per month applied.

    Here are the terms for his three lease options:

    FML Lease
    Months Payment/mo Total$
    ........................
    24 $87 = 2088
    30 $69 = 2070
    36 $71 = 2556
    48 $58 = 2784

    1D1 Lease:
    Months Payment/mo Total$
    ........................
    36 $74 = 2664
    30 $84 = 2520
    48 $59 = 2832
    24 $103 = 2472

    9oD Lease:
    Months Payment/mo Total$
    ........................
    27 $86 = 2322
    33 $74 = 2442
    39 $70 = 2730

    What is the better decision to make -- lease or buy, in today's dollars? If leased, which lease method should be taken?

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    https://brainmass.com/business/leasing/lease-versus-purchase-139427

    Solution Preview

    This would be the payment schedule if Danny decided to purchase the computer on his credit card:

    Financial Details:

    Interest compounding: Monthly
    Interest rate: 15.000%
    Loan amount: $2,090.00
    Payment amount: $100.00
    Total payments: $2,437.16
    Total finance charge: $347.16

    Payment schedule:

    Amortization Schedule
    Event Date PaymentInterest Principal Balance
    Loan 07-30-2007 2,090.00
    1 08-30-2007 100.00 26.13 73.87 2,016.13
    2 09-30-2007 100.00 25.20 74.80 1,941.33
    3 10-30-2007 100.00 24.27 75.73 1,865.60
    4 11-30-2007 100.00 23.32 76.68 1,788.92
    5 12-30-2007 100.00 22.36 77.64 ...

    $2.19

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