Question: A machine can be leased for four years at $1000 per month payable at the beginning of each month. Alternatively, it can be purchased for

A machine can be leased for four years at $1000 per month payable at the beginning of each month. Alternatively, it can be purchased for $45,000 and sold for $5000 after four years. Should the machine be purchased or leased if the firm’s cost of borrowing is:
a. 6.6% compounded monthly?
b. 9% compounded monthly?

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