A firm can either buy a piece of equipment for £32000 now or lease it for £7000 for 5 years.?

Question

If it is 10% compounded annually what is the best option. Also if it is 8% compounded annually what is the best option.?

Answer 1

If you lease it and it breaks down then it will be fixed for free.

If you buy it and it breaks down, you will have to pay for it yourself.

Answer 2

.  Over 5 years the cost of buying is 16,000 at 10% and 12,800 at 8%.  THe lease cost is 35,000 over 5 years.  So , if this is the main criteria, you buy.  

Answer 3

Dull...but depends on how it was financed but I'd say leasing it - greater flexibility and choices.

Are you even going to reveal the answer?