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Forums › ACCA Forums › ACCA FM Financial Management Forums › Purchase vs. Lease
Why do we not include interest cost when we are calculating for purchase option?
Like for example, in my question:
Machine could be bought for $750k using a bank loan charging annual rate of 7% pa.
Scrap value after 5 years is 10% of purchase price
Maintenance cost is $20000 pa.
Thanks
The reason we discount is in order to account for the interest.
(If you want me to answer, then in future please ask in the Ask the Tutor forum)
