Assume zero residual value if the buy option is chosen

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Reference no: EM131247497

Bobby Bobcat needs to decide whether to lease or buy an office building. The purchase price of the building would be $2,000,000. If the lease option is chosen, the lease agreement would require 20 annual payments of $200,000 beginning immediately. A 10% interest rate is implicit in the lease agreement. Which option, buy or lease, should Bobby choose evaluating this from a financial cost standpoint only. Assume zero residual value if the buy option is chosen.

Reference no: EM131247497

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