Emma Runs a Small Factory That Needs a Vacuum Oven

question 31

Multiple Choice

Emma runs a small factory that needs a vacuum oven for brazing small fittings. She can purchase the model she needs for $180,000 up front, or she can lease it for five years for $4,200 per month. She can borrow at 7% APR, compounded monthly. Assuming that the oven will be used for five years, should she purchase the oven or should she lease it?

• A) Lease, since the present value (PV) of the lease is $12,224 less than the cost of the oven.
• B) Lease, since the present value (PV) of the lease is $8,642 less than the cost of the oven.
• C) Lease, since the present value (PV) of the lease is $2,212 less than the cost of the oven.
• D) Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven.

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Definitions:

Facial Expressions

Visible changes in the face that convey emotional states, intentions, or reactions to stimuli, serving as crucial components of nonverbal communication.

Phony Smile

A forced or insincere smile, often used to hide one's true feelings or to socially conform.

Complex Expressions

Phrases or sentences that combine multiple elements such as operators, variables, and constants to convey a specific calculation or idea.

Illustrators

Nonverbal behaviors that accompany a verbal message and either contradict, accent, or complement it.