Question
You have the option to purchase or lease a five-axis horizontal machining center. Any revenues generated from the operation of the machine will be the
You have the option to purchase or lease a five-axis horizontal machining center. Any revenues generated from the operation of the machine will be the same whether it is leased or purchased. Considering the information given, should you lease or purchase the machine? Conduct after-tax analyses of both options. The effective income tax rate is 45%.the evaluation period is five years, and the MARR is 88% per year.
Purchase price:
$357,000
capital to be borrowed at 6% equal annual payments for three years
Depreciation: three year, MACRS rk1 = .333 rk2 = .4445 rk3 = .1481 rk4 = .0741
Annual maintenance cost: $20,000
Resale value at EOY five:$141,000
Calculate the AW Value for the purchasing option. I see how to make the table seen in this problem http://www.chegg.com/homework-help/Engineering-Economy-15th-edition-chapter-7-problem-50P-solution-9780132554909 but I can not figure out how to calculate the principal payment. Please show an explanation of how to solve this problem step by step! Thank you!
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