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Solve the following from 1-3 step by step providing answers to the closest cent. Accuracy of 4 significant figures is expected. Your company needs a

Solve the following from 1-3 step by step providing answers to the closest cent. Accuracy of 4 significant figures is expected.

Your company needs a new system for the next eight years to evaluate transmission lines. The two ways to obtain this equipment, purchase or lease are described below. The interest rate is 5% per year.

A. Purchase: Initial cost of $12,000, a $1,200 salvage value and an eight year useful life.

B. Lease: $2,250 per year paid at the beginning of the year.

  1. What is the present worth of the Item A, the purchase choice?
  2. What is the present worth of Item B, the lease choice?
  3. Which choice would you recommend for the company?

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