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.
Correct Answer:
Verified
Q60: Wright Corp.is considering the purchase of a
Q61: Dallas Corp.is trying to decide whether to
Q62: The discount rate that would return a
Q63: Randall Corp.is trying to decide whether to
Q64: Olive Corp.is considering the purchase of a
Q66: A profitability index greater than _ means
Q67: Independent projects should be prioritized according to
Q68: The internal rate of return is a
Q69: When comparing mutually exclusive capital investments,managers should:
A)choose
Q70: Grace Corp. ,whose required rate of return
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents