Lease Versus Purchase. Zalka and Daughters, a Finnish publisher, is considering the purchase of a photocopy machine. The dealer has offered a sale or a lease contract. Maintenance and supplies costs are the same under either arrangement. The cash purchase price in Finnmarks is Fmk45,000. The lease arrangement is monthly payments of Fmk2,000 for 24 months. Zalka's annual cost of funds is approximately 12 percent (or 1 percent per month). Assume that the machine will have a technological life of two years. Ignore taxes.

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Which is the more appealing financial arrangement? Explain.