Precision Graphics Ltd. (PGL) is looking at modernizing its facilities. As part of that process, PGL has decided to acquire new high-speed colour laser photocopiers. It has the option of buying the machines for $75,000 or leasing them for 5 years. PGL would be able to finance 100% of the purchase with a 5 year 7% loan. If purchased, PGL would also purchase a 5-year maintenance contract for $880 per year, payable at year-end. Annual lease payments, including maintenance, would cost $18,300. There is not expected to be any residual value at the end of the lease. PGL's tax rate is 28%, and the equipment falls into Class 8 with a 20% CCArate.

a. Should PGL buy or lease the copiers?

b. If the copiers had a residual value of $10,000, what difference would that make to the leasing decision?

c. If the government changed the CCA rate for the machines to 50%, what would be the newNAL?

d. Should PGL lease if it can borrow at 5%?