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Foster Incorporated is trying to decide whether to lease or purchase a piece of equipment...

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Accounting

Foster Incorporated is trying to decide whether to lease or purchase a piece of equipment needed for the next 10 years. The equipment would cost $53,000 to purchase, and maintenance costs would be $5,200 per year. After 10 years, Foster estimates it could sell the equipment for $25,000. If Foster leases the equipment, It would pay $15,000 each year, which would include all maintenance costs. If Foster's cost of capital is 12%, Foster should: (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $ )
Note: Use the appropriate factors from the PV tables.
Multiple Choice
buy the equipment, as the net present value of the cost is about $53,000 less.
lease the equipment, as the net present value of the cost is about $10,400 less.
buy the equipment, as the net present value of the cost is about $10,400 less.
lease the equipment, as the net present value of the cost is about $6,700 less.B
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