Alissas Place needs a new paper copier, Alissa Hoss, the owner, is faced with the following two alternatives: Buy Lease Cost of equipment $ 15,000.00 $ - Semi-Annual equipment rental $ - $ 3,500.00 Salvage value in 3 years $ 2,000.00 $ - Annual costs: Labor $ 25,000.00 $ 25,000.00 Supplies $ 3,000.00 $ 3,000.00 Utilities $ 2,000.00 $ 2,000.00 Interest expense $ 1,000.00 $ - Repairs $ 1,500.00 $ -

Additional information: Assume that the paper copier has a three-year life.

REQUIRED: 1. Which costs are irrelevant? 2. Prepare a three-year cost schedule for each alternative and include only relevant costs. (Ignore income taxes and the time value of money) 3. What alternative would you recommend?