Question: You are considering whether to buy or lease a machine whose purchase price is $12,000. Taxes on the machine will be $580 due in one

You are considering whether to buy or lease a machine whose purchase price is $12,000. Taxes on the machine will be $580 due in one year, $464 due in two years, and $290 due in three years. If you buy the machine, you expect to be able to sell it after three years for $5,000. If you lease the machine for three years, you make an initial payment of $2650 and then three payments of $2650 at the end of each of the next three years. The leasing company will pay the taxes. The interest rate is 7.75% per year, compounded annually. Should you buy or lease the machine? Explain.

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