Time line of cash flow and the present value of an annuity due Mauer Mining Company leases a special drilling press with annual payments of $100,000 The contract calls for rent payments at the beginning of each year for a minimum of 8 years. Mauer Mining can buy a similar drill for $670,000, but it will need to borrow the funds at 6% a. Show the two choices on a timeline with the cash flow. b. Determine the present value of the lease payments at 6% c. Should Mauer Mining lease or buy this drill? a. Which of the following figures correctly shows the two choices on a timeline with the cash flow? (Select the best response.) To T2 T3 ...... S100.000 $100,000 $100,000 $100,000 ..... $100,000 Lease S670,000 Loan O B. To T3 ...... $100,000 $100,000 $100,000...... S100,000 $100,000 Lease

Time line of cash flow and the present value of an annuity due Mauer Mining Company leases a special drilling press with annual payments of $100,000 The contract calls for rent payments at the beginning of each year for a minimum of 8 years. Mauer Mining can buy a similar drill for $670,000, but it will need to borrow the funds at 6% a. Show the two choices on a timeline with the cash flow. b. Determine the present value of the lease payments at 6% c. Should Mauer Mining lease or buy this drill? a. Which of the following figures correctly shows the two choices on a timeline with the cash flow? (Select the best response.) To T2 T3 ...... S100.000 $100,000 $100,000 $100,000 ..... $100,000 Lease S670,000 Loan O B. To T3 ...... $100,000 $100,000 $100,000...... S100,000 $100,000 Lease

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 3BE

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