1. Thomas Corporation is evaluating whether to lease or purchase equipment.Its tax rate is 35% .The company expects to use the equipment for 4 years, with no expected salvage value.The purchase price is $2 million and MACRS depreciation, 3-year class, will apply.If the company enters into a 4-year lease, the lease payment is $460,000 per year, payable at the beginning of each year.If the company purchases the equipment it will borrow from its bank at an interest rate of 10 % .

a.Calculate the cost of purchasing the equipment with debt.

b.Calculate the cost of leasing the equipment.

c.Calculate the net advantage to leasing.Should the company purchase or lease the equipment?

2. ) Marcal Corporation is consideringa silver mining project would cost $18 million today and generate positive cash flows of $3.5 million a year at the end of each of the next 10 years.The project's cost of capital is 12%.

a.Calculate the project's NPV if the company proceeds now..

b.The company is fairly confident about its cash flow forecast, but expects to have better price information in 2 years.The company believes the cost would be $19 million in2 years.It estimates there is a 50% change CFs will be $4 million for 10 years and a 50% change CFs will be $2 million for 10 years.Should the company proceed with the project now or wait 2 years until it has better information?

c.Apart from the calculations above, discuss 3qualitativefactors that the company should consider when making its decision on accepting the new project.

All calculation must be done in excel