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Mauer Mining Company leases a special drilling press with annual payments of $100,000. The contract...

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Finance

Mauer Mining Company leases a special drilling press with annual payments of $100,000. The contract calls for rent payments at the beginning of each year for a minimum of 6 years. Mauer Mining can buy a similar drill for $490,000, but it will need to borrow the funds at 10%.

a.Determine the present value of the lease payments at 10%.

b.Should Mauer Mining lease or buy this drill?

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