document.write( "Question 253065: . A corporation may obtain a machine either by leasing it for 6 years (the useful life) at an annual rent of $3,300 or by purchasing the machine for $12,000. Which alternative is preferable if the corporation can invest money at 8% per annum? \n" ); document.write( "
Algebra.Com's Answer #185258 by richwmiller(17219)\"\" \"About 
You can put this solution on YOUR website!
.08*12000*6=5760 money invested at 8% for six years
\n" ); document.write( "6*3300=19800
\n" ); document.write( "12000+5760=17760
\n" ); document.write( "19800 is larger than 17760
\n" ); document.write( "if they purchase it it will cost 12000+5760
\n" ); document.write( "cost plus interest not earned
\n" ); document.write( "if they rent it will cost 19980-interest earned\r
\n" ); document.write( "
\n" ); document.write( "\n" ); document.write( "696 interest 1 year 8700 on 12000-3300
\n" ); document.write( "432 interest 2 year 5400 on 8700-3300
\n" ); document.write( "168 3 year 2100 on 5400-3300
\n" ); document.write( "0 4 year 00000 on 2100-3300
\n" ); document.write( "696+432+168 =1296 interest for three years
\n" ); document.write( "19980-1296=18684 cost for leasing+interest for 3 years on the remainder of 12000\r
\n" ); document.write( "\n" ); document.write( "cost for purchasing=12000+5760(interest lost)=17760
\n" ); document.write( "so it still comes out better to buy it
\n" ); document.write( "actual costs
\n" ); document.write( "18684 versus 12000
\n" ); document.write( "Since the leasing is so much more than purchase the interest for six years really don't come into play here.
\n" ); document.write( "It would be significant if the leasing were cheaper.
\n" ); document.write( "
\n" ); document.write( "
\n" );