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Question .57 Hoffman. Mining. Limited . needs . the use of a large loader. truck to transport mining material extracted from its Papua New Guinea gold mine.to the associated processing. and extraction plant. The cost of purchasing a new Caterpillar loader truck is.$500,000. . The company can obtain a. 10-year interest and principal loan at an 8.50% per annum. interest rate . from the Bank of PNG . Limited to fund . the . $500,000. purchase . cost. If acquired, the loader.truck.will be.depreciated on a straight-line.basis.over the . 10-year. asset.life. Assume the asset will have no disposal value at the end of the mining project. . Based on the above.loan terms, the debt repayment schedule will be as follows: Yeara Beginning balanced Interesto Totala Loan paymenta Ending Balanced 500,000% $42,500% $542,5000 $76,2040 $466,2960 20 $466,2960 $39,6350 $505,9310 $76,2040 $429,7270 $429.7270 $36,5270 $466,2540 $76,2040 $390.0500 40 $390,0500 $33,1540 $423.2040 $76,2040 $347,0000 5:0 $347,000% $29,4950 $376,4950 $76,2040 $300,2910 6:0 $300,2910 $25,5250 $325,8160 $76,2040 $249,6120 7a $249,612a $21,2170 $270,8290 $76,2040 $194,6250 $194,6250 $16,5430 $211,1680 $76,204a $134,9640 90 $134,9640 $11,4720 $146,4360 $76,2040 $70,2320 10a $70,2320 $5,9720 $76,2040 $76,2040 $00 Alternatively, . the . company . can lease . the . loader truck through the Caterpillar. PNG. Mining . Finance . Company . on a. 10-year. lease . term . based on annual lease payments. made. in advance . (at the beginning of the year) of $60,000. .Hoffman.Mining.Limited. has a corporate tax rate of 30%. Assume that the tax benefits from borrowing or.leasing. payments / allowable deductions are obtained at the end of same year that payments are. made.T Should Hoffman Mining .Limited borrow-and-buy or lease the Caterpillar.loader truck?. (Note: Net advantage of leasing . (NAL).=(PV of Tax Benefits from Leasing -.PV of. Tax Benefits from Borrowing) -Opportunity Cost of.Leasing)1 T