Compare the purchase and lease alternatives on annual cost

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Reference no: EM132042798

Mary Tellas, the production manager at Rogers Corp. is considering a new computer numerical control machine for a cost of $250,000, with annual operating expenses of $20,000 per year. The equipment is expected to last seven years and have residual value of $20,000 at that time. The firm requires a 12% return on its investment. A lease is also being considered. The lease would require a down payment of $20,000 and monthly payment of $4,300 for the seven-year period. Compare the purchase and lease alternatives on an annual cost basis. Please also draw TVM diagrams for both ways.

Reference no: EM132042798

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