A contractor is considering the following three alternatives:

a$)$ Purchase a new computer system for $$15,000.$ The system is expected to last six years

with a salvage value of $$1,000.$

b$)$ Lease a computer system for $6$ years for $$3,000$ per year payable at the beginning of each

year.

c$)$ Purchase a used computer system for $$8,200.$ The system is expected to last $3$ years with

zero salvage value.

Draw cash flow diagrams for each alternative for this problem. For part c$.,$ assume that the

purchase price of a used computer system will remain the same over the next six years.

Which is the best choice using an annual return value of $8\%?$ Which is the best choice for an

annual return value of $12\%?$