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The equipment has a price of 300000 the manufacturer has

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Lonny Excavating Inc. is purchasing a bulldozer. The equipment has a price of $300,000. The manufacturer has offered a payment plan that would allow Lonny to make 10 equal annual payments of $48,823.59, with the first payment due one year after the purchase. Lonny could borrow $300,000 from its bank to finance the purchase at an annual rate of 9%. Should Lonny borrow from the bank or use the manufacturer's payment plan to pay for the equipment? Explain the reason for your choice.

Reference no: EM13598217

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