Business, 09.04.2020 00:27 Kitkatuu

A small strip-mining coal company is trying to decide whether it should purchase or lease a new clamshell. If purchased, the shell will cost $150,000 and is expected to have a $65,000 salvage value in 6 years. Alternatively, the company can lease a clamshell for $30,000 per year, but the lease payment will have to be made at the beginning of each year. If the clamshell is purchased, it will be leased to other strip-mining companies whenever possible, an activity that is expected to yield revenues of $12,000 per year. If the company's minimum attractive rate of return is 15 % per year, should the clamshell be purchased or leased on the basis of a future worth analysis?

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A small strip-mining coal company is trying to decide whether it should purchase or lease a new clam...