Answer:
A is better choice because present value of the cost is lower
Explanation:
given data
lease A costs = $1000 per month
payment = $2000
lease B cost = $1200 per month
revenue either = $1500 per month
rate of return = 10% per year = \frac{0.10}{12} = 0.00833
solution
we find here first Cost of first lease that is express as
Cost of first lease = 2000 + + + .............
solve it we get
Cost of first lease = $32,991.24
and
as that Cost of second lease is here
Cost of second lease = + + .............
solve we get
Cost of second lease = $37,189.48
so we can see that at A is better choice because present value of the cost is lower