The Barrhaven-Bell's Corner (BBC) Railway would like to acquire 4 new locomotives to increase its passenger and freight capacity. BBC has two decisions to make: () should it undertake this new locomotive purchase project; and (ii) if the project should be undertaken should BBC lease or buy/borrower. BBC is considering the following six-year locomotive project: Purchase the 4 locomotives at a price of $1.5 million each. Each locomotive will have salvage value of $250,00 after six years The project will increase BBC's pretax cash flow by $4.0 million a year Locomotives have a CCA rate of 15 percent. BBC's WACC is 11% and its tax rate is 35%. To finance the project BBC is considering the following two options: Option 1 - Issue a six-year bond with a 9% coupon rate Option 2 - Lease the Locomotives - The annual lease rate would be $245,000 each year for each of the locomotives), for a six-year contract. These lease payments would be made at the beginning of each year. The Barrhaven-Bell's Corner (BBC) Railway would like to acquire 4 new locomotives to increase its passenger and freight capacity. BBC has two decisions to make: () should it undertake this new locomotive purchase project; and (ii) if the project should be undertaken should BBC lease or buy/borrower. BBC is considering the following six-year locomotive project: Purchase the 4 locomotives at a price of $1.5 million each. Each locomotive will have salvage value of $250,00 after six years The project will increase BBC's pretax cash flow by $4.0 million a year Locomotives have a CCA rate of 15 percent. BBC's WACC is 11% and its tax rate is 35%. To finance the project BBC is considering the following two options: Option 1 - Issue a six-year bond with a 9% coupon rate Option 2 - Lease the Locomotives - The annual lease rate would be $245,000 each year for each of the locomotives), for a six-year contract. These lease payments would be made at the beginning of each year