Company A has decided that it needs ten new modern buses with the most sophisticated equipment such as refrigerator, air conditioner, toilet, and so forth. The buses that are being considered are made by a manufacturer, $($GMC$),$ and cost $$200,000$ each for a total of $$2$ million. To obtain these buses, two alternative financial arrangements are available to Company A$.$

$1.$It can use the facilities of the Bank of M for a term loan of five years at the interest rate of $20\%.$ If the company is to take this loan and pay cash to the manufacturer, the list price will be cut by $10\%,$ to $$180,000$ per bus.

$2.$GMC can also act as a lessor and offer a five$-$year lease to Company Aso that Company A can obtain uses of Buses without purchasing them. The arrangement calls for Company A to pay $$500,000$ at the beginning of each year for five years. If the company is to take this option, the Lease Promoting Agency $($LPA$),$ a government organization that promotes leasing contracts, will pay Company A $$160,000$ at the end of year $5.$ Because of the special circumstances surrounding this case, the investment can be depreciated for tax purposes at a $50\%$ declining rate $($that is$,$ exceptionally, the CCA rate is $50\%$ instead of the usual $30\%$ for cars$).$ The capital cost of the buses will be added to the existing CCA pool of Company A$.$Because of the heavy usage, the buses will only be good for scrap after five years. The scrap value is estimated to be $$12,000$ per bus for a total of $$120,000.$ Company A will not pay tax for the foreseeable future but the manufacturer's tax rate is $50\%.$

$($a$)$Should Company A buy or lease the buses? Show your work.

$($b$)$What is the NPV lease for the manufacturer?

$($c$)$What is the maximum lease payment that Company A is willing to pay?

$($d$)$What is the minimum lease payment that GMC is willing to accept?