Piece of equipment for your production process

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Reference no: EM132015082

You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $ 9 500 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 6.9 %, what should you do?

Year 0: -39,200 Year 1 : -2,100 Year 2: -2,100 Year 3: -2,100 Year 4: -2,100 Year 5: -2,100

The net present value of the leasing alternative is $ _____. (Round to the nearest dollar.)

The net present value of the buying alternative is $______

Reference no: EM132015082

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