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A corporation may obtain a machine by leasing it for six years (the useful life), paying an annual fee of $3,000, or by purchasing it for $12,000. Which alternative is preferable if the corporation can invest money at 8% per annum (i.e., its cost of capital is 8%)?

Reference no: EM13116122

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Description of investment : A corporation may obtain a machine by leasing it for six years (the useful life), paying an annual fee of $3,000, or by purchasing it for $12,000.
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