Question

Your landscaping company can lease a truck for \$7,200 a year (paid at year-end) for 6 years. It can instead buy the truck for \$35,000. The truck will be valueless after 6 years.

Required:
Which option is the better choice for the landscaping company: leasing or buying the truck?

Answer 1

To compare the costs of leasing and buying the truck, we need to consider the annual cost of leasing and the price of buying the truck. Based on the comparison, buying the truck is the better choice.

Step-by-step explanation:

Leasing or buying a truck: Which is the better choice?

To determine the better choice, you need to compare the costs of leasing and buying the truck. Here's how:

Leasing: The annual cost for leasing the truck is $7,200 for 6 years, so the total cost would be $7,200 * 6 = $43,200.

Buying: The cost of buying the truck is $35,000.

Comparing the costs, we can see that leasing the truck would be more expensive than buying the truck. Therefore, buying the truck would be the better choice for the landscaping company.