Which proposal is less expensive

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Suppose you are studying two hardware lease proposals. Option 1 costs $ 4000, but requires that the entire amount be paid in advance. Option 2 costs $ 5000 , but the paymenents can be made $1000 now and $1000 per year for the next four years. if you do NPV (net present value) analysis assuming a 14% discount rate, which proposal is less expensive? what happens if you use an 8% rate?

 

Reference no: EM13302629

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