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

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 comma 500 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 6.7 %​, what should you​ do?

Year 0 = -$40,800

Year 1: -$2100

Year 2: -$2100

Year 3: -$2100

Year 4: -$2100

Year 5: -$2100

a.) The net present value of the leasing alternative is:

b.) The net present value of the buying alternative is:

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ANSWERS ARE ROUNDED. NEED ANY CHANGE, LET ME KNOW

ANSWERS ARE IN NEGATIVE AS THEY ARE OUTFLOWS

jeff jeffy answered 2 years ago
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