Close Window Moving to another question wil save this respon

Close Window Moving to another question wil save this response. Question 2 Quostion 2 of 30 Mr. Chef is considering purchasing $30,000 of brand new ktchen 5 points Save Anw equipment for his restaurant. The supply lease payments of O He should lease the equipment since the present value of the lease case is $2,300 loss O He should buy the equipment since the present value of the purchasing case is $2300 les O Any option is fine since there is almost no diflerence in terms of present values of both cases O He should lease the equipment since there is almost no difference in tems of present values of both cases while he can spread the payment for 5 years $8,000 per year, paid at the end of oach year. H the WACC of M Chot\'s restaurant is 10%, should ho buy or lease the eopmer? s Moving to another question will save this response. SQuestion 2 of 30 MacBook Air 4 5 6 2 3

Solution

Answer is He should buy the equipment since the present value of purchasing is $ 2300 less. Year Lease payments PVF @ 10% Present value 0 -2000 1 -2000 1 -8000 0.909091 -7272.73 2 -8000 0.826446 -6611.57 3 -8000 0.751315 -6010.52 4 -8000 0.683013 -5464.11 5 -8000 0.620921 -4967.37 Present worth -32326 Present worth of purchase -30000 Excess cost in lease option -2326