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 forfive 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 orshould she lease it?O A. Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven.O B. Lease, since the present value (PV) of the lease is $8642 less than the cost of the oven.O C. Lease, since the present value (PV) of the lease is $2212 less than the cost of the oven.O D. Lease, since the present value (PV) of the lease is $12,224 less than the cost of the oven.

Present Value can be calculated using PV function in excelPV (rate, nper, pmt, [Fv], [type])Rate The…

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?

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?

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter27: Time Value Of Money (compound)

Section: Chapter Questions

Problem 5E

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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? O A. Buy, since the present value (PV) of the lease is $32,108 more than the cost of the oven. B. Lease, since the present value (PV) of the lease is $12,224 less than the cost of the oven. OC. Lease, since the present value (PV) of the lease is $8642 less than the cost of the oven. D. Lease, since the present value (PV) of the lease is $2212 less than the cost of the oven. 202 2021-12 ScreenS 2021-12 Next DI 80 888 F8 F6 F7 FS esc F3 F4 F2 9. OO O O
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