What is the rate of return for the generator

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A diesel generator for electric power can be purchased by the remote community for $480,000 and used for 10 years, when its salvaged value is$50,000. Alternatively, it can be leased for $70,000 a year.(Remember the lease payments occur at the start of the year.) The community's interest rate is 8%. a. What is the interest rate for buying vs leasing? what is the better choice? b. The community will spend $80,000 less each year for fuel and maintenance, than it currently spends on buying power. should it obtain the generator? What is the rate of return for the generator using the best financing plan?

Reference no: EM13214011

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