Question: You have two options to buy or to lease a

You have two options: to buy or to lease a video store.
Option 1: Purchase

If you want to make 25% on your money, should you buy the video store? To answer this question, calculate the following:
1. Net present value
2. Internal rate of return
Option 2: Leasing
You can lease a video store in another town. The net yearly cash flow from operations after deducting lease payments is estimated at $45,000 (net) from year 1 to year 10.
1. If you want to make 25% on your investment, should you lease the video store?
2. Which of the two options would youchoose?

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  • CreatedDecember 03, 2014
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