c.
What is the present value of the cost of leasing 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.)
)

d.
Cheaper to buy or lease?

19.
Find the amount of payment
a.
If you borrow $2,600 and agree to repay the loan in six equal annual payments at
an interest rate of 11%, what will your payment be?
(Do not round intermediate
calculations. Round your answer to 2 decimal places.)

b.
What will your payment be if you make the first payment on the loan immediately
instead of at the end of the first year?
(Do not round intermediate calculations.
Round your answer to 2 decimal places.)
r
)
)

20.
A store will give you a 2.50% discount on the cost of your purchase if you pay cash
today. Otherwise, you will be billed the full price with payment due in 1 month. What is
the implicit borrowing rate being paid by customers who choose to defer payment for the
month?
(Do not round intermediate calculations. Enter your answer as a percent
rounded to 2 decimal places.)
If you assume a purchase price of $1, then:
t

21.
You’ve borrowed $3,122.85 and agreed to pay back the loan with monthly payments of
$170. Assume the interest rate is 15% stated as an APR.
a.
How long will it take you to pay back the loan?
(Do not round intermediate
calculations. Round your answer to the nearest whole number.)
EAR
=
(1 + Monthly interest rate)
12
– 1
=
1.025612 – 1
=
0.3550, or 35.50%

b.
What is the effective annual rate on the loan?
(Do not round intermediate
calculations. Enter your answer as a percent rounded to 2 decimal places.)

ON CALCULATOR:
On some calculators, you can compute the effective annual rate using the "ICONV" function: