#3 Hybrid and derivative Securities

end of year	lease	purchas
1	(64,329)	(68,454)
2	(64,329)	(59,110)
3	(64,329)	(63,596)
4	(64,329)	(66,633)
5	(64,329)	30,056

planes inc Is considering purchasing or leasing small planes to transport executives between there resort homes and corporate headquarters plane is in the 40% tax bracket and it's after tax cost of debt is 7% the estimated after tax cash flows for the purchase and lease alternatives are given in the table

a) given the above cash out flows for each alternative calculate the present value of it after tax cash flows using D after tax cost of debt or each alternative

b) which alternative do you recommend? why?