Question: A small business needs a new delivery truck. The company can either buy the truck outright for $50,000 with a $10,000 Salvage or lease the

A small business needs a new delivery truck. The company can either buy the truck outright for $50,000 with a $10,000 Salvage or lease the truck for $1,000 per month for five years with a $10,000 Deposit. The Rate is 8%. The potential estimated cost savings by having access to a truck instead of using delivery providers for each delivery is about $15,000 annually.

To make a decision of buying or leasing the equipment in this scenario, consider to calculate the NPV using the following factors:

Upfront costs

Ongoing maintenance costs

Cost Savings

Resale value

Interest rate or cost of capital

Project timeline

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