Imagine an asset your rm is interested in using. You have two options to acquire/use that asset:

Imagine an asset your firm is interested in using. You have two options to acquire/use that asset: You can buy it for $200,000 today or you can lease it for $3,980 per month (paid at the end of each month) for five years. 

If your firm's discount rate is 9% per year, which do you choose and how much do you save in today's dollar terms?

Answer rating: 100% (QA)

To determine whether it is more costeffective to buy or lease the asset we need to compare the prese... View the full answer