A Telephone System with a Disposable Value of $4200 After

question 56

Essay

A telephone system with a disposable value of $4200 after five years can be purchased for $16 600. Alternatively, a leasing agreement is available that requires an immediate payment of $1900 plus payments of $150.00 at the beginning of each month for five years. If money is worth 9.6% compounded monthly, should the telephone system be leased or purchased?

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Definitions:

Personal Property

Assets or belongings that are movable and not fixed to one location, unlike real estate.

Bailment

A legal relationship where physical possession of personal property is transferred from one party to another, under the agreement that the property will be returned.

Bailor

One who entrusts goods to a bailee.

Bailee

A person or entity that has temporary possession of personal property belonging to another under a bailment agreement.