Gerry Company has to install an air purifier that is mandated by the law. There are two choices. Purifier A can be purchased for 4,000 today. Maintenance costs will be $100 per year and the expercted life of the purifier is 10 years. Purifiier B can be leased for annual payment of $765. the lease payments include all maintenance expenditures. the purifier can be used immediately but the first lease pament is due one year from now. The lease contract is 5 years. The company's cost of capital is 10%. Which purifier should be chosen and why? State which purifier should be chosen, include the numbers supporting this.
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Gerry Company has to install an air purifier that is mandated by the law. There are two choices.
Purifier A can be purchased for 4,000 today. Maintenance costs will be $100 per year and the expercted life of the purifier is 10 years.
Purifiier B can be leased for annual payment of $765. the lease payments include all maintenance expenditures. the purifier can be used immediately but the first lease pament is due one year from now. The lease contract is 5 years. The company's cost of capital is 10%. Which purifier should be chosen and why? State which purifier should be chosen, include the numbers supporting this.
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