Foster Inc. is trying to decide whether to lease or purchase a piece of equipment needed for the next ten years. The equipment would cost $45,000 to purchase, and maintenance costs would be $5,000 per year. After ten years, Foster estimates it could sell the equipment for $20,000. If Foster leases the equipment, it would pay $12,000 each year, which would include all maintenance costs. If the discount rate for Foster is 10%. The present value factor for an annuity is 6.1446 and the present value for a lump sum (one-time) payment is 0.3855). Foster should:

Question 16 options:

buy the equipment, as net present value of cost is about $5,700 less. buy the equipment, as net present value of cost is about $45,000 less lease the equipment, as net present value of cost is about $2,000 less lease the equipment, as net present value of cost is about $5,700 less

Foster Inc. is trying to decide whether to lease or purchase a piece of equipment needed for the next ten years. The equipment would cost $45,000 to purchase, and maintenance costs would be $5,000 per year. After ten years, Foster estimates it could sell the equipment for $20,000. If Foster leases the equipment, it would pay $12,000 each year, which would include all maintenance costs. If the discount rate for Foster is 10%. The present value factor for an annuity is 6.1446 and the present value for a lump sum (one-time) payment is 0.3855). Foster should:

Question 16 options:

buy the equipment, as net present value of cost is about $5,700 less. buy the equipment, as net present value of cost is about $45,000 less lease the equipment, as net present value of cost is about $2,000 less lease the equipment, as net present value of cost is about $5,700 less