Please calculate the NPV of the leasing option with the given information.

Please calculate the NPV of the purchasing option with the information given.

Question 1 Parts A&B (A) Leasing Option $67,500 Five Equal Annual Payments of $13,500 in Arrears Tax Rate After-tax Cost of Debt (Discount Rate) 21% 6.32% Today 0 $70,000 End of year 1 2. 4 5 PV of Avoided Costs Tax Rate 21% 21% 21% 21% 21% Lease Payment ($13,500) ($13,500) ($13,500) ($13,500) ($13,500) NPV of Leasing Option $0 (B) Purchase Option Depreciable Life (Straight Line) Purchase Price Initial Annual Maintenance Maintenance Escalator In-House Maint. Costs Salvage Value Capital Gains Tax Debt Amortization Pre-tax Cost of Debt Income Tax Rate After-tax Cost of Debt (Discount Rate) 3 years $63.600 $1,099 3.0% $400 10.0% of Purch 20% 4 years 8.00% 21% 6.32% End of year 2 3 5 a b PV of Avoided Costs Borrowed Funds Inflow Purchase Price Tax Rate Today $70,000 63,600 (63,600) 21% 21% 21% 21% 21% NPV of Purchase Option 0 Memo Debt Balance $63.600 NPVS Lease $0 Buy $0 Therefore choose Buy Question 1 Parts A&B (A) Leasing Option $67,500 Five Equal Annual Payments of $13,500 in Arrears Tax Rate After-tax Cost of Debt (Discount Rate) 21% 6.32% Today 0 $70,000 End of year 1 2. 4 5 PV of Avoided Costs Tax Rate 21% 21% 21% 21% 21% Lease Payment ($13,500) ($13,500) ($13,500) ($13,500) ($13,500) NPV of Leasing Option $0 (B) Purchase Option Depreciable Life (Straight Line) Purchase Price Initial Annual Maintenance Maintenance Escalator In-House Maint. Costs Salvage Value Capital Gains Tax Debt Amortization Pre-tax Cost of Debt Income Tax Rate After-tax Cost of Debt (Discount Rate) 3 years $63.600 $1,099 3.0% $400 10.0% of Purch 20% 4 years 8.00% 21% 6.32% End of year 2 3 5 a b PV of Avoided Costs Borrowed Funds Inflow Purchase Price Tax Rate Today $70,000 63,600 (63,600) 21% 21% 21% 21% 21% NPV of Purchase Option 0 Memo Debt Balance $63.600 NPVS Lease $0 Buy $0 Therefore choose Buy