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Determine which option the company should pursue

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Question - Schmidt Partners want to invest in a company car because they believe Ubers have become too expensive. Currently, Uber expenses are $50 a day. Schmidt can either lease a car or buy the car outright. The new Tesla they want is $60,000 for purchase. It can be leased for $13,000 per year, but requires a $5,000 deposit which will be given back when the car is returned. Schmidt believe this car will have a useful life of 5 years with a salvage value of $20,000. Assume office electricity expenses are fixed at $150 a month and this is where the new car will be charged. Also, assume a typical year has 270 working days and Schmidt's cost of capital is 12%. Determine which option the company should pursue?

Reference no: EM133139904

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