Peregrine: The CNC Machine Decision Ima case journalPlease help me to answer the 4 questions.Thanks

estimated that there would be increased out-of-pocket option, but he also knew that nonfinancial information would operating costs of $10,000 per month if a new machine were be just as crucial in making a recommendation. Before the brought online. After five years, the machine would have a call, French sat down at his desk to fully analyze the options. salvage value of $40,000. Although Peregrine did not have the cash readily available to make the purchase, French ASSIGNMENT QUESTIONS believed that with a small amount of cash budgeting and planning, this option would be feasible. 1. Without using any numbers, identify the strengths and weaknesses of the three options identified by French. OPTION 2: FINANCE THE PURCHASE OF A NEW CNC MACHINE Are there any other options French should consider? The company selling the CNC machine also offered a 2. Compute and compare the net present value and payback leasing option. The terms of the lease included a down period of each option. payment of $50,000 and monthly payments of $2,200 for five 3. Make a recommendation for French. years. After five years, the equipment could be purchased 4. Rounding to the nearest 1%, at what discount rate does for $1. The operating costs and salvage values would be the leasing produce a higher net present value than paying same as option 1, the purchasing option. The company had cash? the necessary cash on hand to make the down payment for the lease. With both the leasing and purchasing options, the company had sufficient space to operate the new ABOUT IMA(INSTITUTE OF MANAGEMENT ACCOUNTANTS) equipment, and French believed he had almost all of the IMA", the association of accountants and financial professionals right employees in place to execute this plan. in business, is one of the largest and most respected associations