A start-up venture in its first year of businessneeds a $120,000 piece of equipment.Because of changes in technologies it has a maximum service life of 3 years and zero residual value.They have 3 options:

1.Buy theequipment for cash.

What are the pros and cons of the option

What is the effect on the income, balance sheet and cash flow statements

2.Rent the equipment for one year month to month at $8,500 per month

What are the pros and cons of the option

What is the effect on the income, balance sheet and cash flow statements

3.Sign a 3 year lease agreement for 7743 a month for 36 months

What are the pros and cons of the option

What is the effect on the income, balance sheet and cash flow statements

Whichof the 3 would you recommend, and why?