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Your firm is purchasing a new IT system, which will last for four years. You can purchase the system for an upfront cost of $150,000
Your firm is purchasing a new IT system, which will last for four years. You can purchase the system for an upfront cost of $150,000 or you can lease the system from the manufacturer for $4,000 paid at the end of each month for four years. Your firm can borrow at an interest rate of 5% APR with semiannual compounding. Should you purchase the system outright, or pay $4,000 per month? Explain, and show your calculations.
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