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Heidi Incis Considering Whether to Lease or Purchase a Piece of of Equipment.The

Question 65

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Heidi Inc.is considering whether to lease or purchase a piece of equipment.The total cost to lease the equipment will be $120,000 over its estimated life,while the total cost to buy the equipment will be $75,000 over its estimated life.At Heidi's required rate of return,the net present value of the cost of leasing the equipment is $73,700 and the net present value of the cost of buying the equipment is $68,000.Based on financial factors,Heidi should:


A) lease the equipment,saving $45,000 over buying.
B) buy the equipment,saving $45,000 over leasing.
C) lease the equipment,saving $5,700 over buying.
D) buy the equipment,saving $5,700 over leasing.

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