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You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,000 per
You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part o 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 5 years). If your discount rate is 7.1%, what should you do? Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 - $40,800 - $1,900 - $1,900 - $1,900 - $1,900 - $1,900 The net present value of the leasing alternative is $ (Round to the nearest dollar.)
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