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Burnham Corporation is comparing two alternatives for leasing a machine. Alternative A is a lease that requires six annual payments of $2,000 with the first
Burnham Corporation is comparing two alternatives for leasing a machine. Alternative A is a lease that requires six annual payments of $2,000 with the first payment due immediately. Alternative B is a lease that requires two payments of $2,750 and three payments of $2,250 with the first payment due one year from now. Use Excel or a financial calculator for the computations. Round your answer to the nearest dollar. a. Calculate each alternative if the relevant discount rate is 5% and determine which alternative Burnham should choose. Alternative A: $ (40,000) Alternative B: $ 0 x Alternative A appears to be the better alternative b. Calculate each alternative if the relevant interest rate is 7% and determine which alternative Burnham should choose. Alternative A: $ 0 x Alternative B: $ 0 Alternative B. appears to be the better alternative
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