Ray owns a gym and he needs equipment for a new workout class. He has two different options:
1. Lease equipment for $1100 per month
2. Purchase new equipment for $24000 which he will finance with a bank loan that charges an interest rate of 7.1%, compounded monthly. He will pay off the loan in 2 years with regular monthly payments. After 2 years, he can sell the equipment for $3800. The workout class runs 3 days a week and he expects to make $285 for each day that the workout class is run.
a) How much profit will Ray make over 2 years if he leases the equipment?
b) How much profit will Ray make over 2 years if he buys the equipment?
0 answers