Mowbot Company is evaluating the production of a new part. It would require the acquisition of a special CNC lathe costing $375,000. The machine would be used for five years then sold for $135,000. Mowbot’s MARR is 18%. In addition to the sales quotation, the sales representative has quoted a five year lease for $81,000 per year, with the first year’s payment due on delivery. Based on pretax analysis, should Mowbot choose leasing or buying?
Mowbot Company is evaluating the production of a new part. It would require the acquisition of a special CNC lathe costing $375,000. The machine would be used for five years then sold for $135,000. Mowbot’s MARR is 18%. In addition to the sales quotation, the sales representative has quoted a five year lease for $81,000 per year, with the first year’s payment due on delivery. Based on pretax analysis, should Mowbot choose leasing or buying?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Mowbot Company is evaluating the production of a new part. It would require the acquisition of a special CNC lathe costing $375,000. The machine would be used for five years then sold for $135,000. Mowbot’s MARR is 18%.
In addition to the sales quotation, the sales representative has quoted a five year lease for $81,000 per year, with the first year’s payment due on delivery. Based on pretax analysis, should Mowbot choose leasing or buying?
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