Kiddy Toy Corporation needs to acquire the use of a machine tobe used in...

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Accounting

Kiddy Toy Corporation needs to acquire the use of a machine tobe used in its manufacturing process. The machine needed ismanufactured by Lollie Corp. The machine can be used for 8 yearsand then sold for $12,000 at the end of its useful life. Lollie haspresented Kiddy with the following options: (FV of $1, PV of $1,FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriatefactor(s) from the tables provided.)
1. Buy machine.
The machine could be purchased for $162,000 in cash. Allinsurance costs, which approximate $7,000 per year, would be paidby Kiddy.
2. Lease machine.
The machine could be leased for an 8-year period for an annuallease payment of $27,000 with the first payment due immediately.All insurance costs will be paid for by the Lollie Corp. and themachine will revert back to Lollie at the end of the 8-yearperiod.
Required: Assuming that a 10% interest rate properly reflectsthe time value of money in this situation and that all maintenanceand insurance costs are paid at the end of each year, determinewhich option Kiddy should choose.
Ignore income tax considerations.
(Negative amounts should be indicated by a minus sign. Roundyour final answers to the nearest whole dollar amount.)

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In: AccountingKiddy Toy Corporation needs to acquire the use of a machine tobe used in its...Kiddy Toy Corporation needs to acquire the use of a machine tobe used in its manufacturing process. The machine needed ismanufactured by Lollie Corp. The machine can be used for 8 yearsand then sold for $12,000 at the end of its useful life. Lollie haspresented Kiddy with the following options: (FV of $1, PV of $1,FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriatefactor(s) from the tables provided.)1. Buy machine.The machine could be purchased for $162,000 in cash. Allinsurance costs, which approximate $7,000 per year, would be paidby Kiddy.2. Lease machine.The machine could be leased for an 8-year period for an annuallease payment of $27,000 with the first payment due immediately.All insurance costs will be paid for by the Lollie Corp. and themachine will revert back to Lollie at the end of the 8-yearperiod.Required: Assuming that a 10% interest rate properly reflectsthe time value of money in this situation and that all maintenanceand insurance costs are paid at the end of each year, determinewhich option Kiddy should choose.Ignore income tax considerations.(Negative amounts should be indicated by a minus sign. Roundyour final answers to the nearest whole dollar amount.)