QUESTION Net present value of leasing alternative? The net present value of the buying alternative?...
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Net present value of leasing alternative?
The net present value of the buying alternative?
The cost of leasing is ____, so you should lease the _____.
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,200 per year if you sign a guaranteed five-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic life of five years). If your discount rate is 6.8%, what should you do? Year 0 - $39,600 Year 1 - $1,800 Year 2 - $1,800 Year 3 - $1,800 Year 4 - $1,800 Year 5 - $1,800 The net present value of the leasing alternative is $. (Round to the nearest dollar.)
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