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. A barber shop can be purchased for $33,600 now. After 6 years, is expected that the equipment is going to have a salvage value
. A barber shop can be purchased for $33,600 now. After 6 years, is expected that the equipment is going to have a salvage value of $9,800. Instead, the barber shop can be leased for $7,400 per year which must be paid at the beginning of each year. The barber shop is expected to yield endof-year income of $22,000 per year for 6 years whether purchased or leased. Determine if the barber shop should be purchased or leased based on an interest rate of 7% per year and an annual worth analysis technique. (10 Marks)
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