The Lister Clinic also needs to replace its radiology equipment and received the same offer from its vendor to purchase the needed equipment for $100,000 or lease it for five years for $24,000 per year. Lister is a nonprofit organization so no consideration of tax savings needs to be considered in the purchase or lease decision. The salvage value will be zero at the end of year 5. Calculate the cost of purchasing and leasing using a 4% present value. Should Lister purchase or lease?

22.4. After informing its sales representative that it would purchase its radiological equipment, the Lister Clinic received a revised lease option from its sales representative that lowered the annual lease payment to $23,000. If the purchase price remains $100,000 and all other factors are the same as Problem 22-3 recalculate the cost of purchasing and leasing. Does the lower lease payment change the purchase or lease decision?

Answer rating: 100% (QA)

To determine whether Lister Clinic should purchase or lease the radiology equipment we need to calcu... View the full answer