Question

A company is acquiring a machine through leasing. Monthly payment is 5.000 Tl. during 60 months...

A company is acquiring a machine through leasing. Monthly payment is 5.000 Tl. during 60 months at the end of which the machine will have no value. Monthly interest charged is 2%.Instead of using this financing, how much would it be if the machine is purchased by cash payment? What is the additional payment made through leasing?

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Answer #1

Present Worth = 5,000(P/A, 2%, 60)

                        = 5,000(34.761)

                        = $173,805

Thus, it be $173,805 if the machine is purchased by cash payment.

The additional payment made through leasing = ($5,000 * 60) - $173,805 = $126,195

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