Brambles Inc is looking to acquire a new equipment for its project that will last for eight years. The after-tax required rate of return of the project is 13% per annum. Brambles can borrow at a before-tax interest rate of 10% per annum and buy the equipment outright or lease the equipment from ABCs Leasing. Brambles has evaluated the lease and decided to buy the equipment by borrowing since the NPV of lease is calculated to be -$13,000. However, the purchase cost of the equipment was under-estimated by $22,000, also the salvage value of the equipment at the end of the lease term was under-estimated by $7,000. The applicable corporate tax rate is 30% and the equipment is going to be fully depreciated to zero over the eight years using a straight-line method. Will Brambles decision be affected by adjusting the purchasing cost and salvage value?

a) The equipment should still be purchased by borrowing.

b) The new equipment should not be acquired anymore due to the higher cost of equipment.

c) None of the other answers is correct.

d) The equipment should now be leased as the new NPV of lease is now $1221.83.

e) It is now indifferent between lease and borrow-to-buy.