For the lease-purchase, the annual payment increases by $42,000. For the standard lease, the annual payment is $45,000. Art believes that other contract periods could be negotiated, but for this initial analysis he believes that their standard term is representative of the other possibilities. In both cases, the subsidiary uses a term of 5 year ith no option to extend it further. This increase is due to increased use more than to increased age, so it is not affected by the overhaul The manufacturer has a subsidiary that specializes in financing through leases and lease- purchases. Its annual operation and maintenance costs will start at $25,000 and increase by $7500 each year. However, the bulldozer's value on the used market would drop from $180,000 after Year 3 to $135,000 after Year 6.

This overhaul will cost about $150,000, but it should double the useful life of the bulldozer.

If he purchases the bulldozer outright, then he must also decide whether he should plan on overhauling it or selling it after 3 years. He has decided to use the procurement of a new bulldozer with a list price of $290,000 as a test case. Historically, Art, the owner, has purchased the items that he rents out, but his business has been expanding so rapidly that he is considering both straight leases and lease- purchase arrangements. Transcribed image text: Voice & video calling e.com/go/ToshibaTAIS ail cswebdav/pid-3924833-dt-content-rid-33249950 1/courses/BSEN-206-201.1175/ enrt-Highlic ㊦ Home-Welcome to ㊦ Home-Welcome to、O Sign In Macin Home-welcome to l Sign In Mac mL,4Medede Round Table Rental Yards provides construction equipment, trailers, crutches, etc, on short- term rentals.

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