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Heidi Inc. is considering whether to lease or purchase a piece of equipment. The total cost to lease the equipment will be $121,000 over
Heidi Inc. is considering whether to lease or purchase a piece of equipment. The total cost to lease the equipment will be $121,000 over its estimated life, while the total cost to buy the equipment will be $76,000 over its estimated life. At Heidi's required rate of return, the net present value of the cost of leasing the equipment is $77,800 and the net present value of the cost of buying the equipment is $72,000. Based on financial factors, Heidi should: Multiple Choice buy the equipment, saving $5,800 over leasing. lease the equipment, saving $5,800 over buying. buy the equipment, saving $45,000 over leasing. lease the equipment, saving $45,000 over buying.
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