You are currently thinking of leasing an apartment. The currentlease rates quote

You are currently thinking of leasing an apartment. The currentlease rates quoted by the lessor on the lease contracts of $1000 is$18 per month and $12.50 per month for 3-year and 5-year termsrespectively. While the monthly lease rentals on the 3-yearcontract are payable in arrears those for the 5-year contract arepayable in advance (Assuming 10 percent marginal cost of debt tothe lessee) Aside from leasing an apartment you are also thinkingof a hire purchase plan for your car. The plan requires you to pay$91.68 per month in arrear over a 12 month period. Assuming thepurchase price of the car is $1000 and there is no salvage value atthe end of the life.