Determine whether to lease or buy the loader

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Reference no: EM131958242

Question: Your company needs a small front-end loader for handling bulk materials at the Wide-place plant. It can be leased from the dealer for three years for $4050 per year including all maintenance. It can also be purchased for $14,000. You expect the loader to last for six years and to have a salvage value of $3000. You predict that maintenance will cost $400 the first year and increase by $200 per year in each year after the first. Your MARR is 15% per year. (a) Use AW analysis to determine whether to lease or buy the loader.

Reference no: EM131958242

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