Example 3 Your rm is purchasing a new telephone system, which will last for four years. There are two alternatives: purchase outright or lease. If the system is purchased, there is an upfront cost of 150K. If the system is leased from the manufacturer, then the rm must pay 4K at the end of each month for four years. Your rm can borrow from its local bank at an interest rate of 5% APR with semiannual compounding. With alternative is best? Analysis: Cost of leasing the system is 173,867. Best to purchase the system outright