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Devon Corp. is trying to decide whether to lease or purchase a piece of equipment....

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Accounting

Devon Corp. is trying to decide whether to lease or purchase a piece of equipment. The total cost lease the equipment will be $154,500 over its estimated life, while the total cost to buy the equipment will be $121,800 over its estimated life. At Devon's required rate of return, the net present value of the cost of leasing the equipment is $109,800 and the net present value of the cost of buying the equipment is $123,500. Based on financial factors, Devon should:

Multiple Choice

  • lease the equipment, saving $32,700 over buying.

  • buy the equipment, saving $32,700 over leasing.

  • lease the equipment, saving $13,700 over buying.

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