Assignment 21-1b: Cost of Owning and Cost of Leasing

Cost of owning and cost of leasing tables are reproduced below.

Required:

Using the appropriate table from the Chapter 12 Appendix, record the present value factor at 10% for each year and compute the present value cost of owning and the present value of leasing. Which alternative is more desirable at this interest rate? Do you think your answer would change if the interest rate were six percent instead of ten percent?

Cost of Owning - Anywhere Clinic - Comparative Present Value

Not-For-Profit Cost of Leasing	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Net Cash Flow	(48,750)	2,500	2,500	2,500	2,500	5,000
Present value factor (at 6%)
Present value answer =
Present value cost of leasing =

Cost of Leasing- Anywhere Clinic - Comparative Present Value

Not-For-Profit Cost of Leasing	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Net Cash Flow	Chap 01 - Assignment Exercise 1-1 (Word) (8,250)	Chap 01 - Assignment Exercise 1-1 (Word) (8,250)	Chap 01 - Assignment Exercise 1-1 (Word) (8,250)	Chap 01 - Assignment Exercise 1-1 (Word) (8,250)	Chap 01 - Assignment Exercise 1-1 (Word) (8,250)	----
Present value factor (at 6%)
Present value answer =
Present value cost of leasing =