Crescent Corporation Limited $($CCL$),$ a producer of electricity, is considering to expand its operation by adding $5$ generators. The cost of these generators would be Tk$.500$ million. The expected life of the generators is $5$ years. The addition of these generators will result in cash inflows of Tk$.250$ million per year for $5$ years. Cash outflows would be $50\%$ of cash inflows. CCL uses straight line method of depreciation and expects no salvage value from the generators at the end their service lives. IDLC, a leading Non$-$Bank Financial Institution, offered CCL to lease the generators for $5$ years. The lease payments to be made at the beginning of each year would be Tk$.120$ million. The annualized risk$-$free rate of return is $7\%.$ Tax rate for both CCL and IDLC is $30\%.$

a$.$ Show the cash flows associated with the generators to CCL if it decides to buy them.

b$.$ Show the cash flows associated with the generators to CCL if it decides to take lease on them from IDLC.

c$.$ Show the incremental cash flows for lease versus buy to CCL of the generators.

d$.$ Calculate the NPV from the incremental cash flows. If you are the analyst, would you recommend CCL to take a lease on the generators from IDLC or buy them?

e$.$ Find out the NPV of the lease of the generators to IDLC. Show the calculation.

f$.$ Assume now that CCL$$s tax rate is $10\%$ while IDLC$$s tax rate remained at $30\%$ and IDLC revises its offer to reduce the lease payments to Tk$.110$ million a year.

$($i$)$ Now find out the NPV to CCL and to IDLC of the lease.

$($ii$)$ Find out the minimum lease payments that IDLC can accept and maximum lease payments that CCL can accept.