Suppose you are contemplating the purchase of a commercial lawn mower at a cost of $4,000. The expected lifetime of the machine is three years. You can lease the asset to a local business for $2,000 annually (payable at the end of each year) for three years. The lessee is responsible for the upkeep and maintenance of the machine during the three-year period.

Use the preceding information to calculate the present value of the income from the investment to decide if the investment will be profitable in each of the following two cases.

Suppose you can borrow (and lend) money at an interest rate of 6%.
At this interest rate, the $4,000 investment required to purchase the lawn mower be profitable.
Now, suppose you can borrow (and lend) money at an interest rate of 13%.
At this interest rate, the $4,000 investment required to purchase the lawn mower be profitable.

Profits from using currency options and futures.on july 2, the two-month futures rate of the mexican peso contained a 2 percent discount (unannualized). there was a call option on pesos with an exercise price that was equal to the spot rate. there was also a put option on pesos with an exercise price equal to the spot rate. the premium on each of these options was 3 percent of the spot rate at that time. on september 2, the option expired. go to the oanda.com website (or any site that has foreign exchange rate quotations) and determine the direct quote of the mexican peso. you exercised the option on this date if it was feasible to do so. a. what was your net profit per unit if you had purchased the call option? b. what was your net profit per unit if you had purchased the put option? c. what was your net profit per unit if you had purchased a futures contract on july 2 that had a settlement date of september 2? d. what was your net profit per unit if you sold a futures contract on july 2 that had a settlement date of september 2