WeCare, an NGO dedicated to disaster relief, is in need of a plane that it can use to bring supplies to affected areas. One option is: to purchase a plane for $200,000 upfront and pay annual maintenance costs of $25,000 per year at the end of each year. The plane is expected to have a useful life of ten years, and after ten years the plane can be sold for $15,000. Another option is: to lease a plane for nine years, which will cost $60,000 a year for the first two years, and $50,000 for all subsequent years. Lease payments are due at the end of the year. WeCare uses a discount rate of 5.0%. Use the above information to calculate the following: [Note: Round your answers to TWO decimal places. You can include symbols ($) or commas in your answers. Write only POSITIVE numbers - e.g. even if Excel gives you -253.42, write 253.42] A) Present value of the purchase option is: $[Blank 1] B) Present value of the lease option is: $[Blank 2] C) Which option should WeCare choose? [Write 1 if Purchase or 2 if Lease] = [Blank 3] D) If WeCare instead uses a discount rate

Answer rating: 100% (QA)

To solve this problem we will calculate the present value of both the Purchase and Lease options usi... View the full answer