A firm is considering the installation of an automatic data processing unit to handlesome of its accounting operations. Machine for that purpose may be purchased for P2M or may be leased for P 800,000 for the first year and P 100,000 less every year until the end of the 4th year. If money is worth 15%, which alternative is better and by how much?
A firm is considering the installation of an automatic data processing unit to handlesome of its accounting operations. Machine for that purpose may be purchased for P2M or may be leased for P 800,000 for the first year and P 100,000 less every year until the end of the 4th year. If money is worth 15%, which alternative is better and by how much?
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 8P
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A firm is considering the installation of an automatic data processing unit to handle
some of its accounting operations. Machine for that purpose may be purchased for P
2M or may be leased for P 800,000 for the first year and P 100,000 less every year until the end of the 4
th year. If money is worth 15%, which alternative is better and by how much?
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