You are doing internship at GoldMax Corporation. You supervisor is asking to evaluate whether the company should lease or buy the bucket-wheel excavator (BWE). You're provided the following information.
Cost of the BWE:	$ 20,523,114
Expected life of BWE (in years):	10
Machine will be fully depreciated under straight line method but at the end of life it can be scrapped for:	$ 220,625
If you want to borrow a loan to buy the machine, you can borrow at:	7%
If you want to lease the BWE, the annual lease payment is:	$ 2,757,396
The tax rate is:	30%
Answer the following questions:
i. What is the annual depreciation?
ii. What is the annual depreciation tax-saving?
iii. What is the present value of depreciation tax-saving?
iv. What is the present value net proceed from scrapping the BWE?
v. What is the PV of net cost of buying?
vi. What is annual after-tax lease payment?
vii. What is the PV of net cost of leasing?
viii. What is the net advantage of leasing (NAL)?
ix. What should be the competitive annual lease payment?