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Jonas Inc. is considering whether to lease or purchase a piece of equipment. The total cost to lease the equipment will be $120,000 over its estimated life, while the total cost to buy the equipment will be $75,000 over its estimated life. At Jonas's required rate of return, the net present value of the cost of leasing the equipment is $73,700 and the net present value of the cost of buying the equipment is $68,000. Based on financial factors, Jonas should :

a. lease the equipment, saving $45,000 over buying.

b. buy the equipment, saving $45,000 over leasing.

c. lease the equipment, saving $5,700 over buying.

d. buy the equipment, saving $5,700 over leasing.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9437135

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