A company needs an additional machine that will be used for the next 6 years, at which time the machine will be obsolete and have zero salvage value.
| A company needs an additional machine that will be used for the next 6 years, at which time the machine will be obsolete and have zero salvage value. The company has two options available: purchase the asset for the list price of $375,000 cash or lease the asset, requiring 6 annual lease payments of $72,000 with the first payment due immediately. The lease payments include 4.0% interest. Excluding depreciation considerations, the best alternative is to | |||||
| Purchase/Lease: | |||||
| $ Advantage / (Disadvantage) | |||||
| round to nearest whole dollar | |||||
| Resources | |||||
| Present value of an annuity due | |||||
| Present value of ordinary annuity | |||||
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