A lathe costs $57,000 and is expected to result in net cash inflows of $21,000 at the end of each year for three years and then have a market value of $10,000 at the end of the third year. The equipment could be leased for $24,000 ayear, with the first payment due immediately.

a. If the organization does not pay income taxes and its MARR is 12%, show whether the organization should lease or purchase the equipment.

b. If the lathe is thought to be worthonly, say, $19,000 per year to theorganization, what is the better economicdecision?

a. The AW of purchasing the lathe is

$ ?.

The AW of leasing the lathe is

$?.

What is the better economicdecision? Choose the correct answer below.

A. Purchase

B. DoNothing

C. Lease

b. The AW of purchasing the lathe is

$?

The AW of leasing the lathe is

$?

What is the better economicdecision? Choose the correct answer below.

A.DoNothing

B.Purchase

C. Lease