Emerson Corp. is trying to decide whether to lease or purchase a piece of equipment needed for the next five years. The equipment would cost $515,000 to purchase, and maintenance costs would be $21,100 per year. After five years, Emerson estimates it could sell the equipment for $101,500. If Emerson leases the equipment, it would pay $151,900 each year, which would include all maintenance costs. Emersons hurdle rate is 14%. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables.)

a. What is the net present value of the cost of purchasing the equipment? (Round your final answer to the nearest dollar amount.)

b. What is the net present value of the cost of leasing the equipment? (Round your final answer to the nearest dollar amount.)

c. Based on financial factors, should Emerson purchase or lease the equipment? Lease Purchase