Assignment Exercise 21-1: Cost of Owning and Cost of Leasing (p. 504)

Please complete the exercise in Excel using the format provided in the text on page 504 and in the template provided above.

Please see the attached template file for help with this week's GHA. While the file is not in excel (because it is easier for you to read in Word), it provides step by step instructions for you to complete this week's assignment.

The important thing is for you to understand the key financial concepts that go into the decision to lease vs buy.

Using appropriate table from the chapter, record the present-value factor 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 was 6% instead of 10%

Template for Assignment Exercise 21-1 at 10 STEP Cest of Owning Anywhere Clinic - Comparative Present Value Year 0 (48,750) n/a Year Year 2 Year 3 Year4 Year 5 2.500 2,500 2,500 | 2,500 | 5,000 ints Net Cash Flow Present value factor at 10% (page 135 in the OCR) AXB Present Value for (48,750) Each Year Preseut value cost of waing INSERT ANSWER HERE (the sum of ll the yellow boxes) STEP 2 Cost of Leasing Anywhere Clinic -Comparative Present Value Year Year2Year 3Year4 Year S 8,250) (8250) (8,250) (8250)/ Year 0 lints A Net Cash Flow (8,250) Present value factor at 10% (page 133 in the OCR) n/a (8,250) AXB Present Value for Each Year Present valne cest of leasing INSERT ANSWER HERE (the sum of all the yellow boxes)