Chapter 20, Problem 5P

a.

Summary Introduction

To Determine: Whether Company SSM can lease or borrow to buy the equipment by supposing that the lease can be organized.

Introduction: A lease is characterized as an agreement between a lessee and a lessor for the contract of a particular asset for a particular period on payment of determined rents.

b.

Summary Introduction

To Discuss: Whether it is suitable to discount it at the similar rate as the another cash flow and whether all the other cash flows are equally risk.