Your landscaping company can lease a truck for $8,000 a year (paid at year end) for 6

Question:

Your landscaping company can lease a truck for $8,000 a year (paid at year end) for 6 years.

It can instead buy the truck for $40,000. The truck will be valueless after 6 years. The interest rate your company can earn on its funds is 7%.

What if the lease payments are an annuity due, so that the first payment comes immediately? Is it cheaper to buy or lease?

Your landscaping company can lease a truck for $8,000 a

Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...