A manager is thinking about purchasing or renting a new machine. The rent cost is 12,500 per year, and a variable cost of 0.50 per unit. To purchase the machine, it costs 17,500 (which it can return to the seller for 5,000 after one year) and the contract includes a maintenance cost of 8,000. The company expects to produce 16,000 units this year.

From a financial perspective, what decision should the manager make ?

1. Not enough information to make the financial decision

2. There is no difference

3. Buy the machine

4. Rent the machine