D2

The cost to purchase the CT scanis $1,300,000 at 10% (PV), with straight line depreciation over 5 years. The trade-in value $130,000 at the end of its useful life. The maintenance expense equals $12,000 annually.

The cost to lease the equipment is $26,000 per month for a period of 60 months, which includes all maintenance costs. The tables below provide the financial overview of the purchase and lease costs.

Purchase

Year	Principle Payment	Interest Payment	Maintenance Expense	Total Expense	PV Factor at 10%	PV Expense
1					0.909
2					0.826
3					0.751
4					0.683
5					0.621
Trade Value $130,000					0.621

 

Lease

Year	Lease Payment	PV Factor at 10%	PV Expense
1		0.909
2		0.826
3		0.751
4		0.683
5		0.621