Please show Excel formulas for calculating answers.

6. A firm wants the use of a machine that costs $ 100,000. If the firm purchases the equipment, it will depreciate the equipment at the rate of $ 20,000 a year for for years, at which time the equipment will have a residual value of S 20,000. Maintenance will be 2,500 a year. The firm could lease the equipment for four years for an annual lease payment of $ 26,342. Currently, the firm is in the 40% income tax bracket. a) Determine the firm's cash inflows and outflows from purchasing the equipment and from leasing. b) If the firm uses a 14% cost of funds to analyze decisions that involve payments over more than a year, should management lease the equipment or purchase it? c) Would your answer differ if the cost of funds were 8%? (Show the exact amount of the difference and calculations) a and b Cash outflows under leasing: Year Lease payment Tax savings Cash outflows $26,342 $26,342 26,342 $26,342 Hint: Tax savings = ($ 26,342 * 40%) Cash outflows = Lease payment-tax savings Present Value of cash outflows at 14% PV= Cash outflows under purchasing: Year Purchase of asset Maintenance Depreciation Tax deductible expenses Tax savings Cash out flows before sale Sale of asset Cash outlfows after sale ($100,000) 2,500(2,500 ($2,500 $2,500) $20,000$20,000 $20,000 $20,000 Hint: Tax deductible expense = sum of maintenance and depreciation. Tax savings = Tax deductible expense times tax rate (40%) Tax savings is treated as an inflow Tax savings minus the maintenance is cash inflow before the sale of the asset Present value of cash outflows of owning at 14%. Use PV = Which is better method of financing Leasing or Owning? c) Use 8% cost of capital and recalculate each method PV of leasing at 8% PV of owning at 8%