What is the NPV of the lease relative to the purchase?
A) -$125,000
B) -$36,970
C) $75,000
D) $125,000

Name: What is the NPV of the lease relative to the purchase? A) -$125,000 B) -$36,970 C) $75,000 D) $125,000
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Question

Quizplus · Accepted Answer

The NPV of the purchase is -$625,000, while the NPV of the lease is -$662,970. Therefore, the lease option has a better NPV by $36,970. The best choice would be to choose the lease option.

What Is the NPV of the Lease Relative to the Purchase