Citywide Courier Services projects that demand for its services will rise for a period of three years before subsiding. It can lease additional communication equipment for $3,500 at the beginning of every quarter for three years. Alternatively, it can purchase the equipment for $15,995 at 7.5% compounded quarterly. The salvage value of the equipment after three years is expected to be $4,500. Which option would you recommend? How much better is that option in today's dollars?

What is the value if they lease? What is the value if they purchase? Which offer should Citywide Courier Services accept Lease or Purchase?