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{ 1 5 points } Daiwan Semiconductors Company needs to replace an old machine used to lay silicon wafers onto computer processor chips sold to
points Daiwan Semiconductors Company needs to replace an old machine used to lay silicon wafers onto
computer processor chips sold to their automotive clients. Daiwan has the option to lease or to buy this new
piece of equipment.
Using the case facts outlined below and the method used in class, your task is to determine which alternative
you would choose, whether to lease or buy.
Within your Excel sheet you should create a new tab to perform your analysis. Be sure to perform any analysis
required to support your answer. Be sure to state your conclusion.
A The Firm:
i Uses a discount rate of for assessing all new investments
ii Is subject to an income tax rate of
B The Lease
i Has a duration of years
ii Has an annual lease payment of $before tax
C The Financing Option
i The cost of the asset is $
ii The useful life of the asset is years, ie after years it has no remaining value.
iii. CCA depreciation for tax purposes is an equal $ for each of the years of the
asset's useful life.
iv The asset purchase will be financed in full with debt. The debt will carry a rate of
interest of per annum, will have equal annual payments at the end of each year and
will be repaid in full by the end of year
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