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A firm is evaluating whether to lease or purchase a fleet of 4 heavy trucks. The trucks can be purchased for a cost of $240.000
A firm is evaluating whether to lease or purchase a fleet of 4 heavy trucks. The trucks can be purchased for a cost of $240.000 and operated for maintenance, insurance, and general operating costs of $40.000 in year 1, $60,000 in year 2, and $80.000 in year 3, with an expected salvage value of $100.000 at the end of year 3. Alternatively, the trucks could be leased for $120,000 per year for the 3 years, including maintenance costs but not including insurance and general operating costs of $30.000 per year. If the minimum rate of return is 15% before tax considerations. use net present value (NPV, before tax) analysis to determine the best alternative. Show all calculations 1
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