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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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 ...
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