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Your company can lease a truck for $10,000 a year (paid at the year-end) for...

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Finance

Your company can lease a truck for $10,000 a year (paid at the year-end) for 6 years. It can buy the truck for $50,000. Assuming that the truck will be valueless after six years, answer the following:
a. (2 mark) If the interest rate your company can earn on its funds is 7%, is it cheaper to buy or lease?
b. (2 marks) If the lease payments are annuity due, is it cheaper to buy or lease?

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