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General Electric (GE) is considering whether to lease or buy new equipment. The following data is available: Purchase Price: $10 million Lease Payments: $2.2 million
General Electric (GE) is considering whether to lease or buy new equipment. The following data is available:
- Purchase Price: $10 million
- Lease Payments: $2.2 million per year for 5 years
- Discount Rate: 6%
Requirements:
- Calculate the present value of the lease payments.
- Determine the total cost of buying the equipment.
- Compute the net advantage to leasing (NAL).
- Analyze the financial impact of leasing versus buying.
- Make a recommendation on whether GE should lease or buy the equipment.
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