A firm urgently needs a large printer and will either lease a printer at an end-of-year cost of $ 5000 for a 6 year period, or they will purchase the printer at an initial cost of $50,000. If purchased, the printer wilI have a zero salvage value at the end of 6- years life. No other costs are to be considered. MARR is 4%. What is the best investment decision on the basis of the internal rate of return. a. IRR could not be calculated due to no change in cashflow sign b. Negative IRR is not justified and is not applied here to make a proper decision C. Lease d. Buy

A firm urgently needs a large printer and will either lease a printer at an end-of-year cost of $ 5000 for a 6 year period, or they will purchase the printer at an initial cost of $50,000. If purchased, the printer wilI have a zero salvage value at the end of 6- years life. No other costs are to be considered. MARR is 4%. What is the best investment decision on the basis of the internal rate of return. a. IRR could not be calculated due to no change in cashflow sign b. Negative IRR is not justified and is not applied here to make a proper decision C. Lease d. Buy

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

A firm urgently needs a large printer and will either lease a printer at an end-of-year cost of $ 5000 for a 6 year period, or they
will purchase the printer at an initial cost of $50,000. If purchased, the printer will have a zero salvage value at the end of 6-
years life. No other costs are to be considered. MARR is 4%. What is the best investment decision on the basis of the internal
rate of return.
O a. IRR could not be calculated due to no change in cashflow sign
Ob.
Negative IRR is not justified and is not applied here to make a proper decision
C.
Lease
o d. Buy

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