QUESTION 3 (30 points): Analyse the cost of renting, leasing, and purchasing an item of construction equipment under the conditions described. Evaluate total net after-tax cash flow and its present value. General assumptions Income tax rate 32% Tax saving rate 10% Purchase assumption Equipment cost for whole at once payment 150000 Salvage value after 5 years 40000 Yearly depreciation (year 1) 17% Yearly depreciation (year 2) 19% Yearly depreciation (year 3) Yearly depreciation (year 4) Yearly depreciation (year 5) Investment credit (year 1) Cost basis Down payment for equipment 10% of equipment cost cost less half the investment credit 20% of equipment cost 20% 20% 20% Loan interest (year 1) Loan interest (year 2) Loan interest (year 3) Monthly payment for purchasing (yearl to year 3) Term of lease (years) Initial payment Lease payment (monthly) Lease assumption 12498 8018 2969 3985 5 5 month in advance 1800 Rent assumption Rental period (years) 5 Rental rate (monthly) from year 1 Mid-year present worth factors for i = %8; (year 1) Mid-year present worth factors for i = %8; (year 2) Mid-year present worth factors for i = %8; (year 3) 1900 0.96297 0.89164 0.82559 Mid-year present worth factors for i = %8; (year 4) 0.76443 Mid-year present worth factors for i = %8; (year 5) Mid-year present worth factors for i = %8; (final year) 0.70781 0.68058