Sheffield has been selling auto parts to the general public for over $70$ years. It has built a reputation for outstanding customer service,

becoming the third largest auto parts retailer in the Southwest. Hoping to expand its sales to other regions, managers have decided to

establish an online retail presence. Dan Jennings, CIO of Sheffield, is charged with the task of evaluating how the company should

implement this strategy.

One of the first things Dan needs to determine is how to acquire the network servers the company will need. He knows the vendor he

wants to use, but he is uncertain whether he should buy or lease the servers. If he buys the servers for $$3,934,500,$ Sheffield will incur

annual maintenance costs of $$45,750$ over their five$-$year life. If he leases the servers for five years, Sheffield will make lease payments

of $$1,098,000$ in each of the first three years and of $$915,000$ in each of the last two years. Annual maintenance costs under the lease

will be $$73,200.$

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