Emma runs a small factory that needs a vacuum oven for brazing small fittings. She can purchase the model she needs for $180,000 up front, or she can lease it for five years for $4200 per month. She can borrow at 7% APR, compounded monthly. Assuming that the oven will be used for five years, should she purchase the oven or should she lease it? O A. Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven. O B. Lease, since the present value (PV) of the lease is $12,224 less than the cost of the oven. O C. Lease, since the present value (PV) of the lease is $8642 less than the cost of the oven. O D. Lease, since the present value (PV) of the lease is $2212 less than the cost of the oven.

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
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Emma runs a small factory that needs a vacuum oven for brazing small fittings. She can purchase the model she needs for $180,000 up front, or she can
lease it for five years for $4200 per month. She can borrow at 7% APR, compounded monthly. Assuming that the oven will be used for five years, should she
purchase the oven or should she lease it?
O A. Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven.
B. Lease, since the present value (PV) of the lease is $12,224 less than the cost of the oven.
OC. Lease, since the present value (PV) of the lease is $8642 less than the cost of the oven.
D. Lease, since the present value (PV) of the lease is $2212 less than the cost of the oven.
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OO O O
Transcribed Image Text:Emma runs a small factory that needs a vacuum oven for brazing small fittings. She can purchase the model she needs for $180,000 up front, or she can lease it for five years for $4200 per month. She can borrow at 7% APR, compounded monthly. Assuming that the oven will be used for five years, should she purchase the oven or should she lease it? O A. Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven. B. Lease, since the present value (PV) of the lease is $12,224 less than the cost of the oven. OC. Lease, since the present value (PV) of the lease is $8642 less than the cost of the oven. D. Lease, since the present value (PV) of the lease is $2212 less than the cost of the oven. 202 2021-12 ScreenS 2021-12 Next DI 80 888 F8 F6 F7 FS esc F3 F4 F2 9. OO O O
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