Question: Burnham Corporation is comparing two alternatives for leasing a machine. Alternative A is a lease that requires six annual payments of $8,000 with the first

Burnham Corporation is comparing two alternatives for leasing a machine.

Alternative A is a lease that requires six annual payments of $8,000 with the first payment

due immediately.

Alternative B is a lease that requires two payments of $11,000 and three payments of

$9,000 with the first payment due one year from now.

a. Which alternative should Burnham choose if the relevant discount rate is 5%?

b. Which alternative should Burnham choose if the relevant interest rate is 7%?

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