Barrick Company is considering leasing a new equipment. The lease lasts for 5 years. The lease calls for 5 payments of $51,000 per year with the first payment occurring immediately. The equipment would cost $235,000 to buy and would be straight-line depreciated to a zero salvage value over 5 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 6%. The corporate tax rate is 25%.

A) What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in year 0?

		$210,000
		$175,500
		$189,750
		$182,250
		$196,750

b) What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in year 2?

		$42,500
		-$38,000
		$46,000
		-$50,000
		$47,000

c) What is the NPV of the lease relative to the purchase if the asset had a pretax salvage value of $27,000 (ignoring any possible risk differences)?

		-$8,304.72
		-$6,233.88
		-$4,095.87
		$7,412.56
		$9,418.72

d) What is the NPV of the lease relative to the purchase?

		-$5,836.18
		$7,944.92
		$10,449.35
		-$8,102.27
		-$11,502.76