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Suppose you are studying two hardware lease proposals. Option 1 costs $4,000,but requires that the entire amount be paid in advance.

Suppose you are studying two hardware lease proposals. Option 1 costs $4,000,but requires that the entire amount be paid in advance. Option 2 costs $5,000,but the payments can be made $1,000 now and $1,000 per next for years. If you do an NPV analysis assuming a 14 percent discount rate, which proposal is less expensive?What happens if you use an eight percent rate?



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8439560.xls

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