Emma Runs a Small Factory That Needs a Vacuum Oven

question 81

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 $4200 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 $8642 less than the cost of the oven.
• C)Lease,since the present value (PV)of the lease is $2212 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.
• E)Buy,since the present value (PV)of the lease is $72,000 more than the cost of the oven.

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A method of granting privileges, promotions, or pay based on the length of service or tenure with an employer, often used to determine priority in layoffs and job assignments.

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