Please answer all four questions

Click to see additional instructions EnviroLob, an environmental lobbying firm, is in need of office space and is deciding whether to lease or to buy. If the firm purchases office space, the cost is $500,000 up-front plus an additional $2,000 in annual maintenance fees. The building is expected to have a useful life of twenty years and a salvage value of $30,000. If the firm instead decides to lease office space, the annual lease payments are $42,000. The lease payments are due at the beginning of each year, and the term of the lease is 15 years. EnviroLob uses a discount rate of 4.8% Fill in the following blanks: [Note: Write only POSITIVE numbers, e.g. even if Excel gives you -253 or (253), write 253. Also, round your numbers to TWO decimal places e.g. 253.12] A) Present value of the purchase option is $ B) Present value of the lease option is: $ C) Which option should EnviroLob choose [Write 1 if purchase, or 2 if lease.] D) If EnviroLob instead uses a discount rate of 5%, does the option to lease become more or less attractive (ignoring the option to buy): [Write 1 if more, 2 if less, 3 if the same.] Previous Next Save DELL