BigCo is considering leasing the new equipment that it requires, for $159000 a year, payable in advance. The cost of the equipment is $775000, and will last for 5 years. The expected scrap value at the end of 5th year is $117000. Assume that the equipment will be fully depreciated under straight-line method. The tax rate is 32%, the cost of equity is 13% and the cost of debt is 8%. 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] BigCo is considering leasing the new equipment that it requires, for $159000 a year, payable in advance. The cost of the equipment is $775000, and will last for 5 years. The expected scrap value at the end of 5th year is $117000. Assume that the equipment will be fully depreciated under straight-line method. The tax rate is 32%, the cost of equity is 13% and the cost of debt is 8%. 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]