Darshan Engineering, LLC anticipates the need for a high-speed profilometer with digital recording capability for a multi-year quality control subcontract they believe they will win within the next 6 months.

Although the system costs \($43,000\) there is enough time to order a system and have it installed; management is pondering whether to lease the machine for \($9,000\) per year (in the event they lose the contract after 3 years) or whether to buy it outright.

The company MARR is 12%. Problem data are gathered below.

Project Parameter Buy Lease First cost, P $43,000 $9,000 Operating costs, OE $9,500 $9,500 Service period, n 8 years NA Salvage value, SV $7,000 NA