A small firm is considering the purchase of a photocopier. This will cost £2,000. An alternative to purchase is to enter into a leasing agreement known as an operating lease, in which the agreement can be terminated with only one month’s notice. This will cost £60 per month. The firm is charged interest of 12 percent on its overdraft.

Required:

Consider the advantages and disadvantages of each method of obtaining the use of a photocopier.