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Bramble has been selling auto parts to the general public for over 70 years. It has built a reputation for outstanding customer service, becoming the
Bramble has been selling auto parts to the general public for over 70 years. It has built a reputation for outstanding customer service, becoming the third largest auto parts retailer in the Southwest. Hoping to expand its sales to other regions, managers have decided to establish an online retail presence. Dan Jennings, CIO of Bramble, is charged with the task of evaluating how the company should implement this strategy. One of the first things Dan needs to determine is how to acquire the network servers the company will need. He knows the vendor he wants to use, but he is uncertain whether he should buy or lease the servers. If he buys the servers for $4.140,900, Bramble will incur annual maintenance costs of $48,150 over their five-year life. If he leases the servers for five years, Bramble will make lease payments of $1,155,600 in each of the first three years and of $963,000 in each of the last two years. Annual maintenance costs under the lease will be $77,040. Calculate the present value of the purchase and lease option assuming a 12% discount rate. (For calculation purposes, use 4 decimal places as displayed in the factor table provided and round final answers to 0 decimal place, e.g. 58,971. If the amount is negative then enter with a negative sign preceding the number, eg.-5,125 or parenthesis, e.g. (5,125).)) Purchase option Lease Option $ $ Present value
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