7-25. Two different printing machines are being considered in a company. Printer A would be purchased while Printer B would be leased. The company will replace any printer selected at this time after three years (i.e., the planning horizon for this evaluation is three years).

The MACRS depreciation recovery period for office equipment is seven years. Assume an income tax rate of 40% and an after-tax MARR of 15% per year. Using the data in the table below, which machine would you recommend? (7.9)

A B Initial Investment $25,000 n/a Annual lease payment n/a $10,000 Annual operating expenses $1,000 $1,200 Market value after 3 years $6,000 n/a