York Inc.is trying to decide whether to lease or purchase a piece of equipment needed for the next ten years.The equipment would cost $90,000 to purchase,and maintenance costs would be $10,000 per year.After ten years,York estimates it could sell the equipment for $40,000.If York leases the equipment,it would pay $24,000 each year,which would include all maintenance costs.The hurdle rate for York is 10%.
a.What is the net present value of the cost of purchasing the equipment?
b.What is the net present value of the cost of leasing the equipment?
c.Based on financial factors,should York purchase or lease the equipment? Why?

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The Answer of York Inc.is trying to decide whether to lease or purchase a piece of equipment needed for the next ten years.The equipment would cost $90,000 to purchase,and maintenance costs would be $10,000 per year.After ten years,York estimates it could sell the equipment for $40,000.If York leases the equipment,it would pay $24,000 each year,which would include all maintenance costs.The hurdle rate for York is 10%.
a.What is the net present value of the cost of purchasing the equipment?
b.What is the net present value of the cost of leasing the equipment?
c.Based on financial factors,should York purchase or lease the equipment? Why?

York Incis Trying to Decide Whether to Lease or Purchase a a Piece