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An asset has a 10 year economic life with a final disposal cost of $2,000. It can be purchased for $15,000 payable in 1 years time or it can be leased for 10 years for 10 annual lease payments of $2,000 payable annually in advance. Ignoring tax which option should the company acquiring this asset choose assuming a 10% cost of capital? A. Lease. B. Purchase. |