John Walker, systems analyst for Maximum Company, has just completed his Systems Proposal and included in this report is some information concerning the acquisition of a computer configuration. The information is listed as follows:

1. The purchase price of the computer is $1,200,000. Maintenance expenses are expected to run $60,000 per year. If the computer is rented, the yearly rental price will be $370,000, according to an unlimited-use rental contract with free maintenance.

2. Mr. Walker believes it will be necessary to replace the configuration at the end of five years. It is estimated that the computer will have a sale value of $120,000 at the end of the five years.

3. The estimated gross annual savings derived from this particular alternative computer configuration is $450,000 for the first year, $500,000 for the second year, and $550,000 for each of the third, fourth and fifth year. The estimated annual expense for operations is $190,000, in addition to the expenses mentioned earlier. Additional nonrecurring costs are $70,000.

4. If Maximum decides to rent the computer instead of buying, the $1,200,000 could be invested at a 25 percent rate of return. The present value of $1.00 at the end of each of the five years, discounted at 25 percent is 0.800, 0.640, 0.512, 0.410 and 0.328.

Considering the financial information only, what method of acquisition do you recommend and why? What other systems related considerations are relevant? Show your work and reasoning.