I need help getting this solved and make sure my answers i do have are right, thanks!

Monthly equipment lease $2,500.00

Annual equipment lease cost $30,000.00

Early lease termination penalty $10,000.00

Minimum unit equipment purchase10

EquipmentUnit cost10 unit cost

Heater$2,100 $63,000,000

Injection molder$5,450 $163,500,000

Sealer$4,100 $123,000,000

Cardboard cutter $2,695 $80,850,000

Label installer$1,000 $30,000,000

Questions and Answers

AUsing NPV, compare PV of the lease payments with the cost of buying the equipment.

Assume 10% discount rate (ignore tax)

End Of YearCash OutflowsPV Factor10%Net present value

1 $30,000 90.9% $27,270

2 $30,000 82.6% $24,780

3 $30,000 75.1% $22,530

4 $30,000 68.3% $20,490

5 $30,000 62.1% $18,630

Net Present Value for Leasing $113,700

B$190,000 Price of buying from another supplier

$1,000 Monthly reduction of operating costs

10%Discount rate (ignore tax)

DetailsAmount

Cost of equipment $190,000

Savings in Operating costs $45,480

Net cost of buying $144,520

Present value of the lease payments $113,700

CCalculate the after-tax NPV for each option in A & B assuming:

30%Tax rate

5Year depreciation

0Salvage value

Which option is preferable?