Stewart G. Griffin considers whether to purchase or rent a Time Machine. If this device is purchased, the initial cost is $1,000, the useful life is 5 years, and the salvage value is $300.
If the device is rented for 5 years, annual rental costs are $100 in Year 0, $150 in Year 1, $200 in Year 2, $250 in Year 3, and $300 in Year 4.
What is the annual worth of the purchase? 5% interest.