Problem
A construction firm needs a new small loader. It can be leased from the dealer for 3 years for $5500 per year including all maintenance, or it can be purchased for $20,000. The firm expects the loader to have a salvage value of $7000 after 7 years. The maintenance will be $500 the first year and then it will increase by $300 each year. The firm's interest rate is 12% per year. Compare the EUACs for leasing and buying the loader. Contributed by Hamed Kashani, Saeid Sadri, and Baabak Ashuri, Georgia Institute of Technology.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.