Problem:
Stanley Corporation is considering a five year, 6,000,000 bank loan to finance service equipment. The loan has an interest rate of 10 percent and is amortized over five years with end-of-year payments. Stanley can also lease the equipment for an end-of-year payment of 1,790,000. What is the difference in the actual out-of-pocket cash flows between the two payments, that is, by how much (in thousands of dollars) does one payment exceed the other.