The present value (PV) of the lease payments for the delivery truck is closest to ________
Your firm needs to invest in a new delivery truck. The life expectancy of the delivery truck is five years. You can purchase a new delivery truck for an upfront cost of $240,000, or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4800 (paid at the end of each month). Your firm can borrow at 7.80% APR with quarterly compounding.
A) $190,506
B) $238,132
C) $285,758
D) $333,385
Answer: B
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