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You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease he 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 he 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 of the lease. Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed here: (the equipment has an economic life of 5 years). If our discount rate is 6.9%, what should you do? Data table (Click on the following icon 2 in order to copy its contents into a spreadsheet.)
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