Answer to Question #8570 in Finance for neci

Question

kohers inc is considering a leasing agreement to finance some tools it needs for 3 yrs. the tools will be worthless after 3 yrs. the firm can buy the tools and will depreciate using straight line dep. it can borrow 4.8 mil the purchase price @ int rate of 10%. Or they can lease for 3 yrs with pymnts of 2.1 mil each yr with a simple interest loan for the 3 yrs. total cash outflows from purchasing are as follows: (Yr 1) +208; (Yr 2)+208; (Yr 3)-4.592 at end of each yr. calculate lease cash outflows and compare the present value. what is the nal to leasing in thousands.