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Please provide detailed explanations on how to solve this question please, thank you! SMP uses a number of trucks for delivery through out Ontario. The

Please provide detailed explanations on how to solve this question please, thank you!image text in transcribed

SMP uses a number of trucks for delivery through out Ontario. The owner, Humaira Karim Lasi, is considering expansion to Quebec and would require 25 new trucks. She could purchase these trucks wholesale for $26,000 each. Guangyu Yang, VP Finance has determined that each new truck will generate $20,000 in added sales for each of the next 5 years. SMP has a tax rate of 30% and trucks qualify for a CCA rate of 40%. The trucks useful life is 5 years and there would be no residual value. Ashokshan Srithavanthan \& Philip Wu Lease Corp (APL) has offered to lease the trucks to SMP for $6,250 per year over the 5 year period. Humaira has asked Guangyu to consider the offer by APL. Should they lease or buy the trucks? Assume before tax cost of borrowing is 10%

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