Lease versus purchase LB Corporation is attempting to determine whether to lease or purchase research equipment. The firm is in the 22% tax bracket, and its after-tax cost of debt is currently 8% The terms of the lease and of the purchase are as follows Leate Annual end of year loase payments of $32,000 are required over the 3.year life of the lease. All maintenance costs will be paid by the lessor, insurance and other costs will be borne by the lessee The lessen will exercise its option to purchase the asset for $5,000 at termination of the lease Ignore any future tax benefit associatod with the purchase of the equipment at the end of year 3 under the lease option Purchase The research equipment , costing $75,000 can be financed entirely with a 14% loan requiring annual end-of-year payments of $32,305 for 3 years. The tirm in this case will depreciate the equipment under MACRS using a 3. your recovery period (See for the applicable depreciation percentages.) The firm will pay $2,400 per year for a service contract that covers all maintenance costs insurance and other costs will be borne by the firm. The firm plans to keep the equipment and use it beyond its 3-year recovery period a. Calculate the affer tax cash outflows associated with each otomative Hut Because insurance and other costs are borne by the firm under both alteratives thoce costs can be ignorod horo) Je a. Calculate the after tax cash outflows associated with each alternative (Hint Because insurance and other costs are bome by the firm under both alternativos, si those costs can be ignored here b. Calculate the present Value of each cash outflow stroom, using the after tax cost of debt 50 c. Which allomative-lase or purchase would you recommend? Why? lu Then whenrated with the inca in var Round to the nearest dollar