A company is considering investing $15,000 in a heat exchanger. The heat exchanger will last five…

A company is considering investing $15,000 in a heat exchanger. The heat exchanger will last five years, at which time it will be sold for $2,000. The maintenance cost at the end of the first year is estimated to be $1,000 Maintenance costs for the exchanger are estimated to increase by $1,000 per year over its life. As an alternative, the company may lease the equipment for $X per year, including maintenance, with the annual payments to made at the end of each year. a. Choose cash flow diagrams of both alternatives. b. For what value of X should the company lease the heat exchanger? The company expects to earn 5% on its investments. Assume end-of-year lease payments. Click the icon to view the interest and annuity table for discrete compounding when i = 5% per year. Discrete Compounding; i = 5% Uniform Series Single Payment Compound Amount Factor To Find F Given P FIP 1.0500 1.1025 1.1576 1.2155 1.2763 1.3401 1.4071 1.4775 1.5513 1.6289 Present Worth Factor To Find P Given F P/F 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0.6139 Compound Amount Factor To Find F Given A FIA 1.0000 2.0500 3.1525 4.3101 5.5256 6.8019 8.1420 9.5491 11.0266 12.5779 Present Worth Factor To Find P Given A PIA 0.9524 1.8594 2.7232 3.5460 4.3295 5.0757 5.7864 6.4632 7.1078 7.7217 Sinking Fund Factor To Find A Given F A/F 1.0000 0.4878 0.3172 0.2320 0.1810 0.1470 0.1228 0.1047 0.0907 0.0795 Capital Recovery Factor To Find A Given P AIP 1.0500 0.5378 0.3672 0.2820 0.2310 0.1970 0.1728 0.1547 0.1407 0.1295 Uniform Gradient Present Worth Factor To Find P Given G P/G 0.0000 0.9070 2.6347 5.1028 8.2369 11.9680 16.2321 20.9700 26.1268 31.6520 Discrete Compounding; i = 5% Uniform Series -Payment Present Worth Factor To Find P Given F P/E 0.9524 0.9070 0.8638 0.8227 0.7835 0.7462 0.7107 0.6768 0.6446 0.6139 Compound Amount Factor To Find F Given A FIA 1.0000 2.0500 3.1525 4.3101 5.5256 6.8019 8.1420 9.5491 11.0266 12.5779 Present Worth Factor To Find P Given A PIA 0.9524 1.8594 2.7232 3.5460 4.3295 5.0757 5.7864 6.4632 7.1078 7.7217 Sinking Fund Factor To Find A Given F A/F 1.0000 0.4878 0.3172 0.2320 0.1810 0.1470 0.1228 0.1047 0.0907 0.0795 Capital Recovery Factor To Find A Given P A/P 1.0500 0.5378 0.3672 0.2820 0.2310 0.1970 0.1728 0.1547 0.1407 0.1295 Uniform Gradient Gradient Gradient Present Uniform Worth Series Factor Factor To Find P To Find A Given G Given G P/G A/G 0.0000 0.0000 0.9070 0.4878 2.6347 0.9675 5.1028 1.4391 8.2369 1.9025 11.9680 2.3579 16.2321 2.8052 20.9700 3.2445 26.1268 3.6758 31.6520 4.0991 a. What is the cash flow diagram of the lease alternative? Choose the correct answer below. OA OB. EOY 2 0 1 3 4 5 Q $10,000 0 EOY 2 3 1 4 5 Xa+w O 03 + – x x x x x O c. OD. $10,000 EOY 1 2 3 4 5 0 1 EOY 2 3 4 5 O ou x x x X X X What is the cash flow diagram of the purchsing alternative? Choose the correct answer below. QA. 0 B. @ EOY 52,000 @ 8 EOY $1,000 1,000 1,000 1,000 1,000 51,000 2,000 53,000 54,000 55,000 $15,000 $15,000 __. EOY $2,000 Eor O OB $2.000 5 1 2 3 4 5 2 3 4 $1,000 $2,000 $3,000 $4,000 $5,000 $15,000 $15,000 $5,000 $4,000 $3,000 $2,000 $1,000 b. The company should lease the heat exchanger if annual fee is less than $ – (Round to the nearest dollar.)