Tax savings from lease payment

YEAR 0 1 2 3 4 5 -200 -200 -200 -200 Complete the following: (in Sthousands) Use Excel functions and/or formulas to complete the following 1. Cost of owning Equipment Purchase 800 II. Leasing cash flows Lease payment -200 Tax savings from lease payment A-T Savings from maintenance expense Residual value Net cash flow PV cost of leasing C Cost d=CCA rate 3 marks tax rate recost of capital SPV of Salv Value no PV of CCAIS 12 12 12 12 12 -75 800 45% 31% 248.00 III. Net Advantage to Leasing (NAL) 2 marks Equipment Purchase PV of leasing cash flows PV of CCA tax shield NAL Should the firm lease or buy? Lease / Buy because NAL>