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Equivalent annual cost of buying and maintaining

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Reference no: EM132601741

Company A require new buses for their Brisbane extension plan. The company can lease a bus for 4 years at a cost of $46,000 annually. It can instead buy a bus at a cost of $96,000, with annual maintenance expenses of $26,000. The bus will be sold at the end of 4 years for $36,000.

a. What is the equivalent annual cost of buying and maintaining the bus if the discount rate is 12%?

b. Which is the better option? Buy. or. Lease

Reference no: EM132601741

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