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Find net present value of the leasing alternative

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Reference no: EM132909690

You need a particular piece of equipment for your production process.

An? equipment-leasing company has offered to lease the equipment to you for $10,400 per year if you sign a guaranteed 5?-year lease? (the lease is paid at the end of each? year). The company would also maintain the equipment for you as part of the lease.? Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed? here:

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5

-$39,400 -$2,100 -$2,100 -$2,100 -$2,100 -$2,100

?(the equipment has an economic life of 5 ?years). If your discount rate is 6.5%?, what should you? do?

The net present value of the leasing alternative is ?$____

Reference no: EM132909690

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