construction company is considering whether to lease or buy equipment for its new 4-year project. If they buy the equipment, it will have an initial investment cost of S630,000 with annual costs of $48,000. At the end of the 4 years the equipment can be sold for an estimale 125 000 tax purposes, the compary DS depreciation one le dle Declde to lease, it will cost the company's marginal efe per e. rate is 30% and the capital gain tax rate is 15%. The after-tax MARR is 19% per year. Based on the after-tax cash flows, what would you recommend, leasing or purchase? Click the icon to view the partial listing of depreciable assets used business Click the icon to view the GDS Recovery Rates (r) Click the icon to view the interest and annuity table for discrete compounding when the MARR is 19% per year. Use the table to detemine the ADS recovery period for construction equipment, and hence the depreciations, taxes and after-tax cash flows for each of the four years for the lease and purchase options. (Costs should be negative cash flows and revenues positive. Round to the nearest dollar.) ATCF(Purchase) Year ATCF (Lease) 0 - 125,000 -630.000 1 -209,979 - 161,000 9 -161,000 -5609 3 - 161,000 301,705 - 161,000 125,000 321,300 Calculate the PW values for the two options. PW(Lease)(19%) = $487,479| (Round to the nearest dollar.) PW(Purchase)(19%) $422,579| (Round to the nearest dollar.) = Based on the PW values, which option is more economical? O A. Leasing O B. Purchase construction company is considering whether to lease or buy equipment for its new 4-year project. If they buy the equipment, it will have an initial investment cost of S630,000 with annual costs of $48,000. At the end of the 4 years the equipment can be sold for an estimale 125 000 tax purposes, the compary DS depreciation one le dle Declde to lease, it will cost the company's marginal efe per e. rate is 30% and the capital gain tax rate is 15%. The after-tax MARR is 19% per year. Based on the after-tax cash flows, what would you recommend, leasing or purchase? Click the icon to view the partial listing of depreciable assets used business Click the icon to view the GDS Recovery Rates (r) Click the icon to view the interest and annuity table for discrete compounding when the MARR is 19% per year. Use the table to detemine the ADS recovery period for construction equipment, and hence the depreciations, taxes and after-tax cash flows for each of the four years for the lease and purchase options. (Costs should be negative cash flows and revenues positive. Round to the nearest dollar.) ATCF(Purchase) Year ATCF (Lease) 0 - 125,000 -630.000 1 -209,979 - 161,000 9 -161,000 -5609 3 - 161,000 301,705 - 161,000 125,000 321,300 Calculate the PW values for the two options. PW(Lease)(19%) = $487,479| (Round to the nearest dollar.) PW(Purchase)(19%) $422,579| (Round to the nearest dollar.) = Based on the PW values, which option is more economical? O A. Leasing O B. Purchase
