Devon Corp. is trying to decide whether to lease or purchase a piece of equipment. The total cost lease the equipment will be $150,500 over its estimated life, while the total cost to buy the equipment will be $120,200 over its estimated life. At Devon's required rate of return, the net present value of the cost of leasing the equipment is $108,200 and the net present value of the cost of buying the equipment is $119,500. Based on financial factors, Devon should: Multiple Choice lease the equipment, saving $30,300 over buying. buy the equipment, saving $30,300 over leasing. lease the equipment, saving $11,300 over buying. buy the equipment, saving $11,300 over leasing. O O
Devon Corp. is trying to decide whether to lease or purchase a piece of equipment. The total cost lease the equipment will be $150,500 over its estimated life, while the total cost to buy the equipment will be $120,200 over its estimated life. At Devon's required rate of return, the net present value of the cost of leasing the equipment is $108,200 and the net present value of the cost of buying the equipment is $119,500. Based on financial factors, Devon should: Multiple Choice lease the equipment, saving $30,300 over buying. buy the equipment, saving $30,300 over leasing. lease the equipment, saving $11,300 over buying. buy the equipment, saving $11,300 over leasing. O O
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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19.
Transcribed Image Text:Devon Corp. is trying to decide whether to lease or purchase a piece of equipment. The total cost lease the equipment will be $150,500 over its estimated life, while the total cost to buy the equipment will be $120,200 over its estimated life. At Devon's
required rate of return, the net present value of the cost of leasing the equipment is $108,200 and the net present value of the cost of buying the equipment is $119,500. Based on financial factors, Devon should:
Multiple Choice
lease the equipment, saving $30,300 over buying.
buy the equipment, saving $30,300 over leasing.
lease the equipment, saving $11,300 over buying.
buy the equipment, saving $11,300 over leasing.
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