You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for

$ 10 comma 000$10,000

per year if you sign a guaranteed

55-year

lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease.Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic life of

55

years). If your discount rate is

7.4 %7.4%,

what should you do?

Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
negative $ 40 comma 500$40,500	negative $ 2 comma 200$2,200	negative $ 2 comma 200$2,200	negative $ 2 comma 200$2,200	negative $ 2 comma 200$2,200	negative $ 2 comma 200$2,200