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Daniels market is expanding their fresh produce business and are in need of cold storage equipment. The firm can lease a cold storage equipment for
Daniels market is expanding their fresh produce business and are in need of cold storage equipment. The firm can lease a cold storage equipment for 4 years at a cost of $47,000 annually. It can instead buy a cold storage equipment at a cost of $97,000, with annual maintenance expenses of $27,000. The cold storage equipment will be sold at the end of 4 years for $37,000.
a. What is the equivalent annual cost of buying and maintaining the cold storage equipment if the discount rate is 10%?
b. Which is the better option?
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