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 $51,000 to purchase, and maintenance costs would be $5,800 per year. After ten years, Foster estimates it could sell the equipment for $25,000. If Foster leases the equipment, it would pay $14,000 each year, which would include all maintenance costs. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) If the hurdle rate for Foster is 10%, Foster should (Round your PV factors to 4 decimal places. Do not round intermediate calculations. Round your final answer to the nearest hundred.)

a. buy the equipment, as net present value of cost is about $51,000 less. b. lease the equipment, as net present value of cost is about $9,000 less. c. buy the equipment, as net present value of cost is about $9,000 less. d. lease the equipment, as net present value of cost is about $5,300 less.

Wilson Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $57,000. The equipment will have an initial cost of $635,000 and have an 8 year life. The salvage value of the equipment is estimated to be $131,000. If the hurdle rate is 12%, what is the approximate net present value? (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Round your PV factors to 4 decimal places and final answer to the nearest dollar amount.)

a. $14,023 b. less than zero c. $504,000 d. $131,000