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ABC Company wants to buy diesel generator at a price of $1,600,000,000 . The alternatives are...

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Finance

ABC Company wants to buy diesel generator at a price of$1,600,000,000 . The alternatives are as follows:
-Buy cash at a price of $1,600,000,000
OR
-Rent at a price of $30,000,000 per month.
Assumption of a deposit interest of 7% a year. In your opinion,which one to choose ?

Answer & Explanation Solved by verified expert
3.9 Ratings (713 Votes)
ABC company has two optionWe will have to evaluate both the optionOption 1 Buy Diesel generatorCash outflow for the year 1600000000Option 2 Take Generator on the rentCash outflow for the month 30000000Now total cashflows are 1600000000less cashflow for the month 30000000Remaing cash    See Answer
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