A firm is considering either leasing or buying a


A firm is considering either leasing or buying a microcomputer system. If purchased, the initial cost will be $250,000; annual operating and maintenance costs will be $80,000/year. Based on a 6-year planning horizon, it is anticipated the computer will have a salvage value of $30,000 at that time. If the computer is leased, annual operating and maintenance costs in excess of the annual lease payment will be $60,000/year. Based on an interest rate of 10%, what annual beginning-of-year lease payment will make the firm be indifferent between leasing and buying? a. Use the present worth method. b. Use the internal rate of return method.

Request for Solution File

Ask an Expert for Answer!!
Financial Management: A firm is considering either leasing or buying a
Reference No:- TGS01465731

Expected delivery within 24 Hours