Question
Irbid Company is planning to acquire a new asset. The company can either buy the asset or can lease the asset on a three-year loan.
Irbid Company is planning to acquire a new asset. The company can either buy the asset or can lease the asset on a three-year loan. The cost of the new asset when buying is JOD 32,000. The asset can be leased by paying JOD 99 today and JOD 450 per month for the next three years. If the company purchase the new asset, the company will pay it off in monthly payments over the next three years at 6% Annual Percentage Rate. The financial manager believes that the new asset can be sold for JOD 23,000 in three years. Should the company buy or lease the new asset?
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