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Q8) Acme Inc. is deciding between leasing and purchasing machinery that is necessary for its operations....

Q8) Acme Inc. is deciding between leasing and purchasing machinery that is necessary for its operations. The lease is for 10 years with an annual cost of $100,000. The purchase price is $670,000. The purchased machinery would cost $15,000 per year to maintain and last 18 years. Acme's WACC is 8%. What is the equivalent annual annuity of the purchase option? Which option should Acme choose, lease or purchase?

A) -$133,075.18; Purchase

B) -$52,222.22; Purchase

C) -$133,075.18; Lease

D) -$86,490.40; Purchase

E) -$100,299.97; Lease

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jeff jeffy answered 2 hours ago
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