P15-5. Lease versus Buy Precision Graphics Ltd. {PGL} is looking at modernizing its facilities. As part of that process, PGL has decided to acquire new high-speed colour laser photocopiers. It has the option ofbuying the machines for $75,000 or leasing them for 5 years. PGL would be able to nance 100% ofthe purchase with a 5 year 7% loan. prurchased, PGL would also purchase a 5- year maintenance contract for $880 per year, payable at yearend. Annual lease payments, including maintenance, would cost $18,300. There is not expected to be any residual value at the end ofthe lease. PGL's tax rate is 28%, and the equipment falls into Class B with a 20% CCA rate. 1. Should PGL buy or lease the copiers? Answer NAL=$1515 Lease 2. If the copiers had a residual value of $10,000, what difference would that make to the leasing decision? H H Answer D t NAL=$-4-556 0 \"0 lease 3. If the government changed the CCA rate for the machines to 50%, what would be the new NAL? Answer I Do not DIAL$733 Lease 4-. Should PGL lease if it can borrow at 5%? Answer H 00 not NAL=-$1090 Lease