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The IT manager at Portsmouth Associates (PA) is trying to decide whether to purchase a new server or lease space from a cloud computing service.
The IT manager at Portsmouth Associates (PA) is trying to decide whether to purchase a new server or lease space from a cloud computing service. The server would cost $240,289 to purchase today and require annual maintenance fees of $30,239 each year of the server's 4-year life. Maintenance costs would start one year from now and end four years from now. If PA's opportunity cost of capital is 9.2%, what annual lease payments would make PA indifferent between buying the server and leasing space from the cloud service? Assume the lease payments would begin one year from now
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