Deciding between leasing and buying the computer

Assignment Help Business Economics

Reference no: EM131809773

The lease of a computer system will cost $150 per month for a 2-year commitment. If the lease is renewed, it should cost less on each contract. The estimated price if renewed 2 years hence is $120 per month and $90 per month if renewed again in year 4. Buying the computer system will cost $7000, and it will be worth $1500 in year 6, which is the horizon for this problem.

In deciding between leasing and buying the computer, what is the incremental rate of return? If the MARR is a nominal 12%, should the computer be leased or purchased? What are the noneconomic factors, and are they likely to favor leasing or buying?

Reference no: EM131809773

Questions Cloud

What is the most critical staffing issue organizations face : What is the most critical staffing issue organizations face.

Probability that more patients are helped by the treatment : Suppose that each of 300 patients has a probability of 1/3 of being helped by treatment independent of its effect on the other patients.

Discuss recommendations for the patient for ongoing function : Discuss recommendations for the patient/family for ongoing functioning (social, occupational and academic, if applicable).

Marketing managers using an opt-in statement for permission : about marketing managers using an opt-in statement for permission to send such emails that would?appear when customers make their first purchase.

Deciding between leasing and buying the computer : In deciding between leasing and buying the computer, what is the incremental rate of return?

Calculate the cost of goods sold and ending inventory : Assuming that the periodic inventory method is used, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFO

Review john bowlby and ainsworths attachment theory : One of the areas of social and emotional development studied by developmental psychologists is the concept of infant attachment to a parent or caregiver.

Projects can be repeated : Does your answer depend on an assumption about whether the projects can be repeated? If so, answer the question again for the other assumption.

What amount of equity income should be reported by julie : What amount of Equity Income should be reported by Julie Corp in 2014

User Account

All Pages