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Q4.) Numeric Problem - Equivalent Annual Cost a Marshall Boya needs a new plant for its new business line. The company has two options: lease
Q4.) Numeric
Problem - Equivalent Annual Cost a Marshall Boya needs a new plant for its new business line. The company has two options: lease the plant at a cost of $31.000 per year for 4 years or buy it for $81,000 with $11,000 yearly maintanence cost. If the company decides to buy the plant. It will be able to sell it for $21.000 at the end of 4 years. a. Calculate the equivalent annual cost of buying and maintaining the plant for 4 years. Assume that the discount rate is 12. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Equivalent annual cost b. Which option is better for Marshall Boya? O Buy Lease Step by Step Solution
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