Use the Information for the Question(s)below

question 50

Essay

Use the information for the question(s)below.
Your firm needs to invest in a new delivery truck.The life expectancy of the delivery truck is five years.You can purchase a new delivery truck for an upfront cost of $200,000,or you can lease a truck from the manufacturer for five years for a monthly lease payment of $4000 (paid at the end of each month).Your firm can borrow at 6% APR with quarterly compounding.
-Should you purchase the delivery truck or lease it? Why?

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Definitions:

Preexisting Duty Rule

A legal principle stating that an existing obligation in a contract cannot serve as consideration for a new contract or for modifying the existing contract.

Unforeseen Circumstances

Events or situations that could not have been predicted or expected and may affect the ability to fulfill obligations.

Liquidated Debt

A debt with a known, fixed amount that is not disputed by either party.

Unliquidated Debt

A debt for which the exact monetary value has not been determined.