Problem

Your firm is purchasing a new telephone system, which will last for four years. You can purchase

the system for an upfront cost of $$150,000,$ or you can lease the system from the manufacturer for

$$4000$ paid at the end of each month. ${?}^3$ Your firm can borrow at an interest rate of $5\%$ APR with

semiannual compounding. Should you purchase the system outright or pay $$4000$ per month?