Question
In: Finance
An agricultural accounting firm needs a new copy machine. If it leases the copier on a...
An agricultural accounting firm needs a new copy machine. If it leases the copier on a five year lease, five rental payments of $900 will be made at the end of the year, including the first. Alternatively, the firm could purchase the copier. If purchased, an initial investment of $500 would be required. Amortized loan payments of $500 would then be made at the end of years 1-5. The copier would have no salvage value at the end of five years. $2200 in cash inflow each year would be attributed to the copier. The cost of capital is 9%. What is the approximate net present value of the lease option?
a.$4,500
b.$5,057
c. $6,112
d.$3,000
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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