Use the following information for questions $13-16.$ You are looking at purchasing a

widget producing machine that will cost $$11$ million which will be salvageable in $9$

years for $$3$ million. The machine will increase revenues by $$7\mathrm{.}5$ million per year and

will fall into the $30\%$ CCA bracket. You can lease the machine for $$2\mathrm{.}75$ million per

year. Your pre$-$tax cost of debt is $8\mathrm{.}5\%.$ Your corporate tax rate is $35\%.$

$13.$ What is the present value of the CCA tax shield? $($Answer: e$)$

a$.$ $$1,725,455$

b$.$ $$1,989,546$

c$.$ $$2,102,366$

d$.$ $$2,442,394$

e$.$ $$2,619,634$

$14.$ What is the NPV of the purchase? $($Answer: b$)$

a$.$ $$25,421,228$

b$.$ $$27,323,257$

c$.$ $$28,541,725$

d$.$ $$28,652,337$

e$.$ $$28,987,251$

$15.$ What is the net advantage to leasing $($NAL$)?($Answer: c$)$

a$.-$$$7,241,582\mathrm{.}43$

b$.-$$$6,975,354\mathrm{.}39$

c$.-$$$6,567,796$

d$.-$$$6,254,308\mathrm{.}20$

e$.-$$$6,105,882\mathrm{.}09$

$16.$ What would the pre$-$tax lease payment have to be for you to be indifferent between

leasing or buying? $($Answer: d$)$

a$.$ $$842,665\mathrm{.}04$

b$.$ $$891,268\mathrm{.}83$

c$.$ $$927,654\mathrm{.}33$

d$.$ $$1,371,182\mathrm{.}05$

e$.$ $$1,582,545\mathrm{.}21$