I have just started a new position as a finance officer and your boss asks you to review a recent analysis that was done to compare the following to alternative proposals to replace a printer.

Alternative A:

the firm can buy a new printer for $2000$$ payable immediately. The new printer would make cash savings for the firm of $2000$$ in the first year of operation$\mathrm{.}4000$$ in the second year and $2000$$ in the fifth year. The firm makes no savings from the printer in the third and fourth year of its life. And will need to spend $$4000$ on it In year $3$ because of expensive repairs. The machine is scrapped at the end of $5$ years.$($ i$.$e$.$ the firm will dispose of the machine at the end of year five with no residual value.$($no cash inflowfrom disposable of machine$).$

Alternative B :

As an alternative to the purchase of a new printer $($ scenario A$),$ the firm could rent one, paying $1000$$ per year,in advance $,$for the $5$ years. Return would still expect to make the exactly same costs and savings as in the purchase of a new printer$($scenario A above $).$ Except for the repair cost in year $3,$ since the rent company will cover the repair cost. If the companies required rate of return is $10\%$ advise the top management as to which of the two scenarios $($buy or rent$)$ should be used to obtain the printer.

Which option would you recommend to the upper management based on the NPV rule?