Emma runs a small factory that needs a vacuum oven for brazing small fittings. She can purchase the model she needs for $180,000 up front, or she can lease it for five years for $4,200 per month

She can borrow at 7% APR, compounded monthly. Assuming that the oven will be used for five years, should she purchase the oven or should she lease it?
A) Lease, since the present value (PV) of the lease is $12,224 less than the cost of the oven.
B) Lease, since the present value (PV) of the lease is $8,642 less than the cost of the oven.
C) Lease, since the present value (PV) of the lease is $2,212 less than the cost of the oven.
D) Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven.


Answer: D

Business

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