Your boss asks you to review an option to lease an equipment storage facility that the firm needs. You are to compare it

[answerhappygod]

Your boss asks you to review an option to lease an equipment
storage facility that the firm needs. You are to compare it with
the purchase of the facility. The following information are
pertinent to your decision: - The facility will be needed for ten
years - If the facility is leased, the lessor will conduct all
maintenance; if purchased, your firm must conduct maintenance -
Facility maintenance is expected to cost $105000 per year - The
cost to lease the facility is $930000 per year at the beginning of
each year - The purchase price of the facility is $8600000 and the
market value at the end of ten years is expected to be $4300000 -
The before-tax cost of debt is 7%, and the tax rate is 25% - The
company's current EBIT is $2250000 (before leasing or purchasing
the facility). Assuming that the facility has a seven-year
depreciation life for tax purposes (i.e. it will be fully
depreciated by end of ten years), compute the NPV for each option
and based on the cost, indicate your decision (round to nearest
$1,000).
BUY; BUY NPV = -5506000, LEASE NPV =
-5694000
BUY; BUY NPV = -5568000, LEASE NPV = -5632000
LEASE; LEASE NPV = -5506000, BUY NPV = -5694000
none of them
LEASE; LEASE NPV = -5568000, BUY NPV = -5632000