1. Your company plans to buy a new machine with a cost of $80,000. It is expected to operate for 12 years, with no salvage value at the end of that time. You have estimated that the purchase of this machine will enhance your company's net before-tax cash flow by $20,000 per year. The tax rate is 40%, and the company's after-tax minimum acceptable rate of return is 10%. There are two financing options for the machine. The first would involve a $60,000 bank loan at an interest rate of 8%, payable over eight years. If you decide to use this option, the machine will be depreciated over 10 years using straight- line depreciation. Alternatively, you could lease the machine. That would require a deposit of $10,000, repayable at the end of the 12- year lease period. The rental payments would be $12,000 a year for 12 years, payable at the beginning of each year (but tax-deductible at the end of the tax year). Prepare a table showing the after-tax cash flow for debt financing, and one for leasing. What is the after-tax cost of the money borrowed by leasing? What would you recommend to your company's management? What other factors should your company consider in deciding whether to buy or lease the machine