Devon Corp. is trying to decide whether to lease or purchase a piece of equipment. The total cost lease the equipment will be $153,000 over its estimated life, while the total cost to buy the equipment will be $121,200 over its estimated life. At Devon's required rate of return, the net present value of the cost of leasing the equipment is $109,200 and the net present value of the cost of buying the equipment is $122,000. Based on financial factors, Devon should:

Multiple Choice

lease the equipment, saving $31,800 over buying.

buy the equipment, saving $31,800 over leasing.

lease the equipment, saving $12,800 over buying.

buy the equipment, saving $12,800 over leasing.