QUESTION $7$

Your firm is purchasing a new computer server that will last for five years. The firm can purchase the system for an

upfront cost of $$400,000.$ Alternatively, you can lease the server from the manufacturer for $$8,000$ paid at the end of

each month. The lease price is offered for a $60-$month lease with no early termination$-$you cannot end the lease early.

Your firm can borrow at an interest rate of $6\%$ per year with monthly compounding. Should you purchase outright or

lease?

A$.$ Purchase Outright

B$.$ Lease