you need a new computer. you are considering either leasing or putting the purchase on your credit card.
the terms of the lease agreement are $250 down and a monthly payment of $100 for 12 months, with an option to purchase for $300 at the end of the lease period.
if you buy the computer now and put the purchase on your credit card, your monthly payment would be $130.00, with the credit card interest rate of 18% compounded monthly.
what is the best option?  

Since the cost of buying on credit card is less

hence, buying from credit card is best option.

Step-by-step explanation:

Given;

Terms of lease as:

$250 down

monthly payment = $100 for 12 months

cost of purchase at the end of lease period = $300

Thus,

the total cost of buying on lease terms = $250 + ( 12 × $100 ) + $300

or

the total cost of buying on lease terms = $1750

Now,

For second alternative

Monthly payment = $130.00

Duration = 12 months

Rate of interest = 18%

monthly rate of interest, r  = = 1.5% = 0.015

Now, using the compounding formula

Th total cost =

on substituting the values, we get

Th total cost =

or

the total cost = $1720.78

Since the cost of buying on credit card is less

hence, buying from credit card is best option.

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step-by-step explanation: