This is a 3-part question. Your company needs to acquire a new machine. One option is to purchase the equipment, which has a market value of $65,000 and a trade-in value after five years of $7,000. Another option is to LEASE the machine from a leasing company, with MONTHLY payments of $1,200 per month for five years.

Assuming a discount rate of 6.0% compounded monthly, answer the following:

a) What is the net present value of the purchase option? (+/- no decimals)

b) What is the net present value of the leasing option? (+/- no decimals)

c) Which option should you recommend to your boss?