You own a cab company and are evaluating two options to replace

your fleet. Either you can take out a five$-$year lease on the

replacement cabs for $$500$ per month per cab, or you can purchase

the cabs outright for $$30,000,$ in which case the cabs will last

eight years. You must return the cabs to the leasing company at the

end of the lease. The leasing company is responsible for all

maintenance costs, but if you purchase the cabs, you will buy a

maintenance contract that will cost $$100$ per month for the life of

each cab. Each cab will generate revenues of $$1,000$ per month.

Assume the cost of capital is fixed at $12\mathrm{.}0\%.($Hint: Make sure to

round all intermediate calculations to at least four decimal

places.$)$a$.$ Calculate the NPV per cab of both possibilities: purchasing

the cabs or leasing them.b$.$ Calculate the equivalent monthly benefit of both

opportunities.c$.$ If you are leasing a cab, you have the opportunity to buy the

used cab after five years. Assume that in five years a

five$-$year$-$old cab will cost either $$10,000$ or $$16,000,$ with equal

likelihood; will have maintenance costs of $$500$ per month; and will

last three more years. Which option should you take?