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
You might also like to view...
Target costing reverses the procedure used by cost-based pricing methods
Indicate whether the statement is true or false
The basic assumption of diversity definitions based on a conceptual rule is that members of a given culture:
a. Share common world views and behaviors b. Share the same experiences c. Share the same perceptions d. Share the same characteristics
Activity-based budgeting assumes that activity cost varies with units of product
Indicate whether the statement is true or false
Substantial performance is also called ________.
A. minor breach B. material breach C. complete breach D. strict breach