SECTION B You are a consultant who has been employed by a transport company, Arbed Ltd. The company is bidding for a license to transport silicate from mines located in the south-east of the Northern Territory to the wharves of Darwin. If the company succeeds in obtaining a license, then they must acquire a custom-made silicate transport vehicle (STV). The management of Arbed Ltd. has sought your guidance as to whether they should purchase such a vehicle by borrowing money or lease it. They have supplied you with the following information. $85,000 5 years 30.00% STV Purchase Price Effective Life of STV Effective tax rate Before-tax cost of an equivalent loan Annual lease payment required in advance Salvage value of STV at conclusion of effective life 15.00% p.a. $16,150 $12,750 The management team also tells you that if they purchase the STV they will fully depreciate it, for taxation purposes, using the straight-line method, and that all cash flows have been quoted on a before-tax basis. Assuming that Arbed Ltd. was going to acquire the STV, would you recommend that they purchase by borrowing or lease it? What is the incremental wealth associated with your decision