Devon Corp. is trying to decide whether to lease or purchase a piece of equipment. The total cost lease the equipment will be $156,500 over its estimated life, while the total cost to buy the equipment will be $122,600 over its estimated life. At Devon's required rate of return, the net present value of the cost of leasing the equipment is $110,600 and the net present value of the cost of buying the equipment is $125,500. Based on financial factors, Devon should:
Multiple Choice lease the equipment, saving $33,900 over buying. buy the equipment, saving $33,900 over leasing.
lease the equipment, saving $14,900 over buying. buy the equipment, saving $14,900 over leasing.
