Advice the management whether to buy or to lease

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Question - The company is considering the possibility of acquiring new equipment for $40,000.00. The salvage value is estimated to be $5000 at the end of 6y years. Maintenance cost will be $400 per month payable at the end of each month. The company could lease the equipment for $1200 per month payable at the end of each month, under the six years lease agreement the lessor would pay the maintenance cost. If the company earns J=18% on its capital. Advice the management whether to buy or to lease?

Reference no: EM132873530

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