Big Co is considering leasing the new equipment that it requires, for $142000 a year, payable in advance. The cost of the equipment is $1085000, and will last for 7 years. The expected scrap value at the end of 7th year is $120000. Assume that the equipment will be fully depreciated under straightline method. The tax rate is 27%, the cost of equity is 13% and the cost of debt is 6%. i. What is the net cost of buying? [4 marks] ii. What is the net cost of leasing? [4 marks] iii. What is the net advantage of leasing (NAL)? [2 marks] iv. What is the maximum lease payment that would make Big Co indifferent between leasing or buying? (5 marks] Big Co is considering leasing the new equipment that it requires, for $142000 a year, payable in advance. The cost of the equipment is $1085000, and will last for 7 years. The expected scrap value at the end of 7th year is $120000. Assume that the equipment will be fully depreciated under straightline method. The tax rate is 27%, the cost of equity is 13% and the cost of debt is 6%. i. What is the net cost of buying? [4 marks] ii. What is the net cost of leasing? [4 marks] iii. What is the net advantage of leasing (NAL)? [2 marks] iv. What is the maximum lease payment that would make BigCo indifferent between leasing or buying? [5 marks]