Should wcf lease or purchase the equipment

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Your bank has offered to finance the entire $3.2 million. The repayment plan will be $800,000 per year with an interest charge of 9 percent on the outstanding balance of the loan at the beginning of each year. Principal + interest payments are due at the end of each year. FCW Leasing has offered a lease payment of $950,000 per year due at the beginning of each of the years.

Answer the following:

Question 1: Should WCF lease or purchase the equipment?

Question 2: What is the annual lease payment that will make WCF indifferent to whether it leases or not?

Reference no: EM132555155

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