Question: Your firm is purchasing a new telephone system, which will last for four years. You can purchase the system for an upfront cost of $150,000,

  1. Your firm is purchasing a new telephone system, which will last for four years. You can purchase the system for an upfront cost of $150,000, or you can lease the system from the manufacturer for $4,000 paid at the end of each month. Your firm can borrow and lend at a stated annual interest rate of 5% with semi-annual compounding. Should you purchase the system outright or pay $4,000 per month?

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