Answer:
After 25 days of lease, the purchase cost will be the same as the lease cost.
Explanation:
a) Data and Calculations:
Initial investment (purchase) cost = $11,000
Lease cost = $10,000 ($500 * 20)
Difference in purchase and lease cost = $1,000 ($11,000 - $10,000)
Daily lease cost after the first 20 days = $200
Additional number of days for purchase cost to equal lease cost = $1,000/$200 = 5 days
b) One can infer from the above that it will benefit the company more to purchase the set of servers by making the initial investment of $11,000 than leasing the servers.
