The Brown Company is comtemplating the purchase of a helicopter for its executives to use in their business trips. This helicopter could be either purchased or leased from the manufacturer. The useful life of the helicopter is FOUR YEARS. Data concerning these two alternatives follow:

	Buy	Lease
Purchase Price	900,000
Annual cash payments for servicing and licenses	10,000
Cash Payments for repairs:
End of second year	6,000
End of third year	8,000
Salvage value	270,000
Annual rental payment		250,000

If the helicopter is leased, it would be returned to the manufacturer in four years. Melissa's required rate of return is 22%. Answer the following questions by selecting the correct answer.

1. The present value of all the cash outflows for rental payments, if the helicopter is leased would be:

A) $(647,250)

B) $(633,500)

C) $(716,000)

D) $(510,500)

2. The present value of the cash outflorws for repairs, assuming the helicopter is purchased would be:

A) $(14,000)

B) $(8,682)

C) $(2,000)

D) $(8,440)

3. The present value of the salvage value of th helicopter, if the helicopter is purchased would be:

A) $121,770

B) $162,360

C) $114,210

D) $99,900

4. Compute the Net Present Value of "BUY". Should the company BUY or LEASE?