A company has the following alternatives on some real estate that it needs for its new plant. It can lease the facility for $10,000 a month for 15 years, or it can buy the facility now for $800,000. The company’s weighted average cost of capital is 12% and payments are made at the end of each month.
which would be cheaper for the company to buy or lease real estate? show your work.
what non-quantative factors should the management consider when making the decision?
1 answer