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Black_prince [1.1K]
3 years ago
7

A set of servers, that your project needs, has a daily lease cost of $500 for the first 20 days and the lease cost is reduced to

$200 daily for any days after the first 20 days. If the team decides to purchase this set of servers, the investment cost is $11,000 and a daily operational cost of $75. (a) After how many days will the purchase cost be same as the lease cost
Business
1 answer:
Shalnov [3]3 years ago
5 0

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.

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