Lee Wah Press (LWP) is considering a leasing arrangement to finance some special printing machines that it needs for production during the next three years.

A planned change in the companys production technology will make the new machine obsolete after 3 years. LWP will depreciate the new machine on a straight-line basis towards zero salvage value. The firm can borrow the installed cost of $480,000, at 10% interest per annum, calculated on an annual reducing balance, to buy the new machine or make three equal beginning-of-year lease payments of $210,000 should it decide to take up lease financing.

Annual maintenance costs associated with ownership, payable at the end of year, are estimated at $25,000. Annual insurance premium associated with the purchase is estimated to be at $6,000, payment is on a cash-before-cover basis. Should LWP opt for lease financing, all other costs will be borne by the lessor. LWP tax rate is 40%.

What is the net advantage to leasing (NAL)? Which option should LWP select, lease financing or purchase outright via bank borrowing?

a. How much is the annual after-tax cash outflow of the lease option in Year 1, Year 2, and Year 3 ?

b. How much is the present value of the after-tax cash outflows of the lease option?

c. How much is the annual loan payment amount of the purchase option in Year 1, Year 2 and Year 3 ?

d. how much is the interest expense of the purchase option in Year 1, 2, 3?

e. how much is the annual maintenance cost associated with the purchase option in Year 1, Year 2, and Year 3 ?

f. how much is the annual insurance premium associated with the purchase option in Year 1, Year 2, and Year 3 ?

g. how much is the annual depreciation amount associated with the purchase option in Year 1, Year 2 and Year 3 ?

g. how much is the total deduction amount for the purchase option eligible for tax shield in Year 0,1,2,&3 ?

h. how much is the tax shield amount in Year 0 ,1,2,&3?

i. how much is the after-tax cash outflow associated with the purchase option in Year 0, 1, 2, 3?

j. how much is the present value of the after-tax cash outflows of the purchase option ?

The Net Advantage of Leasing (NAL) is

Should LWP lease or purchase the special printing machine?

Pls highlight the answer. Thank you!