Determine the best economic choice

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Reference no: EM131186711

A mining company is in need of four trucks. Suppliers will offer the options of purchasing or leasing the trucks. The purchase price is $200,000. Maintenance, insurance, and general operating costs (payable at the end of each year) will be $30,000 in year 1, $40,000 in year 2, and $50,000 in year 3 with an expected salvage value of $70,000 at the end of year 3. The lease price is $80,000 per year for the 3 years (payable at the beginning of each year). The lease covers maintenance costs, but insurance and general operating costs will be $25,000 per year (payable at the end of each year). If the company's MARR is 20%, determine the best economic choice.

Reference no: EM131186711

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