You need a particular piece of equipment for your production process. An equipment-leasing company has offered...

 

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You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic life of 5 years). If your discount rate is 6.8%, what should you do? Year 0 -$40,000 Year 1 -$2,100 Year 2 -$2,100 Year 3 $2,100 Year 4 -$2,100 Year 5 $2,100 You need a particular piece of equipment for your production process. An equipment-leasing company has offered to lease the equipment to you for $10,000 per year if you sign a guaranteed 5-year lease (the lease is paid at the end of each year). The company would also maintain the equipment for you as part of the lease Alternatively, you could buy and maintain the equipment yourself. The cash flows from doing so are listed below (the equipment has an economic life of 5 years). If your discount rate is 6.8%, what should you do? Year 0 -$40,000 Year 1 -$2,100 Year 2 -$2,100 Year 3 $2,100 Year 4 -$2,100 Year 5 $2,100