Question $2(35$ Marks$)$

INN Competent Industries is considering the purchase of a $$300,000$ dollar asset that has a $5-$year life. The asset will generate after$-$tax cash flows of $$98,000$ per year and the company has a marginal tax rate of $40$ percent. The opportunity cost of capital is $12\%.$ The equipment is in class $38($CCA rate of $30\%).$ The lease payments are $$90,000$ per year $($beginning of the year$)$ for $5$ years and the before tax cost of borrowing in the lease is $9\%.$

a$)$ Should the equipment be bought? $(12$ marks$)$

b$.$ Should the equipment be leased? $(13$ marks$)$

c$.$ What is the maximum payment that the company would consider making to at least break even on the leasing arrangement? $(10$ Marks$)$