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Suppose your company is trying to decide whether it should buy special equipment to prepare some high quality publications itself or lease the equipment form another company. Suppose leasing the equipment costs $240 per day. If you decide to purchase the equipment, the initial investment is $6,800, and operations will cost $70 per day. After how many days will the lease cost be the same as the purchase cost for the equipment? Assume your company would only use this equipment for 30 days. Should your company buy the equipment or lease it?

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Solution Summary

The solution provides a breakdown of the calculation needed for a company to decide on a buy/lease option when the equipment is used for 30 days.

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Leasing:

$240 per day

Buy:
$6,800 down + $70 per day

240x = 6800 + 70x
240x - 70x = 6800
170x = 6800
x = ...

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