over the next four years. The client is also considering purchasing a different CNC systemeTeplace its currently leased system (rather than renewing /entering a new lease contract). The newsystem will cost $450,000 to purchase and install (and for training of employees in use).salvage value of $30,000. The interest rate is projected to be 6% per year during the life o1 theproject.a. Draw a cash flow diagram for the next four vears for the existing system (leased system) and aseparate cash flow diagram for the system that is being considered for purchase.b. For each option (leasing and buying), calculate the value of all cash receipts and disbursementsat the end of the third year.C. Compare the value of each option at the end of the third vear. What should the client do?

end of each year of use) and a new contract the client is considering entering will fix the pree over the next four years. The client is also considering purchasing a different CNC systenhe replace its currently leased system (rather than renewing /entering a new lease contract). 1he new system will cost $450,000 to purchase and install (and for training of employees in use). salvage value of $30,000. The interest rate is projected to be 6% per year during the life of the project. a. Draw a cash flow diagram for the next four vears for the existing system (leased system) and a separate cash flow diagram for the system that is being considered for purchase. b. For each option (leasing and buying), calculate the value of all cash receipts and disbursements at the end of the third year. C. Compare the value of each option at the end of the third year. What should the client do?

end of each year of use) and a new contract the client is considering entering will fix the pree over the next four years. The client is also considering purchasing a different CNC systenhe replace its currently leased system (rather than renewing /entering a new lease contract). 1he new system will cost $450,000 to purchase and install (and for training of employees in use). salvage value of $30,000. The interest rate is projected to be 6% per year during the life of the project. a. Draw a cash flow diagram for the next four vears for the existing system (leased system) and a separate cash flow diagram for the system that is being considered for purchase. b. For each option (leasing and buying), calculate the value of all cash receipts and disbursements at the end of the third year. C. Compare the value of each option at the end of the third year. What should the client do?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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