Heidi Inc. is considering whether to lease or purchase a piece of equipment. The total cost to lease the equipment will be $128,000 over its estimated life, while the total cost to buy the equipment will be $83,000 over its estimated life. At Heidi’s required rate of return, the net present value of the cost of leasing the equipment is $81,300 and the net present value of the cost of buying the equipment is $75,000. Based on financial factors, Heidi should:
Heidi Inc. is considering whether to lease or purchase a piece of equipment. The total cost to lease the equipment will be $128,000 over its estimated life, while the total cost to buy the equipment will be $83,000 over its estimated life. At Heidi’s required rate of return, the net present value of the cost of leasing the equipment is $81,300 and the net present value of the cost of buying the equipment is $75,000. Based on financial factors, Heidi should:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Heidi Inc. is considering whether to lease or purchase a piece of equipment. The total cost to lease the equipment will be $128,000 over its estimated life, while the total cost to buy the equipment will be $83,000 over its estimated life. At Heidi’s required rate of return , the net present value of the cost of leasing the equipment is $81,300 and the net present value of the cost of buying the equipment is $75,000. Based on financial factors, Heidi should:
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