Roofing Company wants to purchase equipment costing $275,000 today.  It is expected that Roofing Company would lease out this equipment for the next 5 years.  Roofing Company would get paid $75,000 each year with the first payment being made at the beginning of the lease period. The coupon rate is 7%.

Requirement:  Determine if it makes sense for Roofing Company to purchase and then lease this equipment especially since the equipment's useful life is 5 years.  Explain your position with workings.

Answer rating: 100% (QA)

To evaluate whether it makes sense for Roofing Company to purchase and lease out the equipment we ne... View the full answer