Particular piece of equipment for your production process

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Reference no: EM131975785

You need a particular piece of equipment for your production process. An? equipment-leasing company has offered to lease you the equipment for $ 9,900 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 below? (the equipment has an economic life of 5 ?years). If your discount rate is 7.4 %. What should you? do?

Year 0 = $-39,100

Year 1 = $-2,000

Year 2 =-$2,000

Year 3 = $-2,000

Year 4 = $-2,000

Year 5 = $-2,000

A) The net present value of the leasing alternative is ?$_____?

B) The net present value of the buying alternative is ?$_____?

Reference no: EM131975785

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