ABC, a young windmill installation company, is considering whether to buy or lease a crane. Below are the specifics for the lease vs buy decision: Leasing would cost $120,000 per year at the beginning of each year. The lease contract term is 5 years with the first year's payment due at the time of contract signing. The lease would be considered a guideline lease. Maintenance costs are covered under the lease agreement. --------------------------------------------------------------------------------------------------------- Purchase of the crane would cost $480,000. Purchased crane would be depreciated using the 5-year MACRS depreciation schedule: 20%, 32%, 19.2%, 11.52%, 11.52%, 5.76% for years 1 - 6 respectively. The crane is expected to be sold for $75,000 at the end of year 5. The maintenance on the crane would cost $12,000 a year, to be paid for at the end of each of the 5 years. --------------------------------------------------------------------------------------------------------- Cost of debt = 9%. Tax rate of the firm is 25%. The firm is profitable and pays taxes. Page 3 of 4 a. What is the PV cost of leasing? b. What is the PV cost of ownership? c. What is the net advantage to