Question

Your office has the option of leasing a copy machine for 60 months or just purchasing one outright. You decide to make a cost comparison of the two options. The total costs for leasing a copy machine for 60 months is $100 per month plus 5 cents per copy. The total cost for purchasing the same machine is $2000 plus 7 cents per copy to cover maintenance and supplies.

Display a graph of the two equations showing the ‘break-even point’ using the Intersect function where the costs are the same for leasing or purchasing as well as a detailed explanation of this “break-even point” and be sure to state how many copies from each option are needed.

Answer 1

Let the number of copies to be printed be "a"

Option 1: - Leasing Option

The total costs for leasing a copy machine for 60 months is $100 per month plus 5 cents per copy.

Total Cost OF leasing Option = Total Lease rentals + Printing Cost

Total Cost OF leasing Option = (60 x 100) + 0.05 x a

Total Cost OF leasing Option = 6000 + 0.05a   ----------------------- (Equation 1)

Option 2: - Purchasing Option

The total cost for purchasing the same machine is $2000 plus 7 cents per copy to cover maintenance and supplies

Total Cost of Purchasing option = Machine cost + Printing Cost

Total Cost of Purchasing option = 2000 + 0.07 x a

Total Cost of Purchasing option = 2000 + 0.07a   ----------------------- (Equation 2)

Evaluating Total cost in both options

Number Of Copies	Total Cost in Leasing Option	Total Cost in Purchase Option
	Equation-1	Equation- 2
0	$6,000	$2,000
40000	$8,000	$4,800
80000	$10,000	$7,600
120000	$12,000	$10,400
160000	$14,000	$13,200
200000	$16,000	$16,000
240000	$18,000	$18,800
280000	$20,000	$21,600
320000	$22,000	$24,400
360000	$24,000	$27,200

Graph of the two equations showing the ‘break-even point’