Dr. Emmett Brown Inc. has decided to acquire a time machine (instead of building another one).

The details on this purchase follow.

Cost of time machine $ 78,000

Expected useful life of time machine (in years) 4

Salvage value at end of useful life $ 8,000

Dr. Brown has two options on how to finance the time machine. Chili Palmer has agreed to advance funds for the entire purchase price, with the loan being payable in equal instalments at the end of each year over the five years. The interest rate on this loan would be 11.5% As an alternative, the machine could be leased over its useful life from the manufacturer with equal annual lease payments payable at the beginning of each year.

Annual lease payment $ 14,000

Additional information is as follows:

Dr. Emmett Brown Incs tax rate 32%

CCA rate for time travel machines 30%

Annual maintenance costs (if Dr. Brown owns the machine) $ 2,100

Should the machine be leased or purchased? Show all calculations.