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You work for the local hospital and you and your colleagues need to decide on whether to purchase new equipment for the clinic.
The acquisition cost is $50,000 if it is purchased. The depreciation of the equipment will be $10,000 for years 2 through 4. If the equipment is leased, it will cost $11,000 per year for 5 years.
Instructions
In regards to owning versus leasing, which method would you recommend and why?
Explain using capital budgeting and capital structure why did you make that decisions.