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Crane Business School is considering whether to lease or buy shuttle buses for students travelling between its two campuses. The buses cost $ 2 .

Crane Business School is considering whether to lease or buy shuttle buses for students travelling between its two campuses. The
buses cost $2.00 million, with a CCA rate of 20 percent. The lease payments are $400,000 per year for the next five years, with
payments made at the beginning of each year. There is no maintenance cost, and the expected market value of the buses after five
years is zero. Assume the cost of borrowing is 8 percent. Note that universities do not pay tax.
Calculate the NPV of the lease payments. (For calculation purposes, use 5 decimal places and final answer to 0 decimal places, e.g.5,275.
Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g.(45).)
NPV(leasing) $
Should Crane Business School lease the buses or buy them?
Crane Business School should
the buses.
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