Question: ABC needs a new machine that costs $ 2 4 , 0 0 0 . The machine has CCA rate of 3 0 % and

ABC needs a new machine that costs $24,000. The machine has CCA rate of 30% and it is the only asset in the asset class. The salvage value is $2,750 at the end of year 10. ABCs cost of debt and tax rate are 8% and 25% respectively.
XYZ, a leasing company, offers ABC a 10-year lease with annual lease payment of $3,000. Its cost of debt and tax rate are 5% and 40% respectively. XYZ has many assets in the asset class which is expected to have positive UCC in the foreseeable future.
a) Calculate the NPV of leasing for ABC and XYZ.
b) What is the maximum annual lease payment acceptable to ABC?
c) What is the minimum annual lease payment acceptable to XYZ?

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