Question

Pedrayes Inc. is considering whether to lease or buy equipment with a useful life of 10...

Pedrayes Inc. is considering whether to lease or buy equipment with a useful life of 10 years. If the company were to purchase the equipment, it would cost $25,000 up front. However, if the company were to lease the equipment, the lease payment would be $4,500 annually across its useful life, with the first payment due immediately. Considering a 10% interest rate, which alternative, lease or buy, would you recommend to Pedrayes?

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