Dallas Corp.is trying to decide whether to lease or purchase a piece of equipment needed for the next five years.The equipment would cost $100,000 to purchase,and maintenance costs would be $10,000 per year.After five years,Dallas estimates it could sell the equipment for $30,000.If Dallas leased the equipment,it would pay a set annual fee that would include all maintenance costs.Dallas has determined after a net present value analysis that at its hurdle rate of 12% it would be better off by $11,000 if it leases the equipment.What would the approximate annual cost be if Dallas were to lease the equipment? (Future Value of $1,Present Value of $1,Future Value Annuity of $1,Present Value Annuity of $1. )(Use appropriate factor from the PV tables.Do not round intermediate calculations.Round your final answer to the nearest hundred. )

Question

Quizplus · Accepted Answer

The Answer of Dallas Corp.is trying to decide whether to lease or purchase a piece of equipment needed for the next five years.The equipment would cost $100,000 to purchase,and maintenance costs would be $10,000 per year.After five years,Dallas estimates it could sell the equipment for $30,000.If Dallas leased the equipment,it would pay a set annual fee that would include all maintenance costs.Dallas has determined after a net present value analysis that at its hurdle rate of 12% it would be better off by $11,000 if it leases the equipment.What would the approximate annual cost be if Dallas were to lease the equipment? (Future Value of $1,Present Value of $1,Future Value Annuity of $1,Present Value Annuity of $1. )(Use appropriate factor from the PV tables.Do not round intermediate calculations.Round your final answer to the nearest hundred. )