Question: Please use excel to solve the problem, show the steps and calculations Q5. (16 Points) Imagine that you are the CFO of a startup. You

Please use excel to solve the problem, show the steps and calculations

Please use excel to solve the problem, show the steps and calculations

Q5. (16 Points) Imagine that you are the CFO of a startup. You are wondering whether to buy or lease office furniture. If you buy the furniture, it will cost you $133,000 today. Alternatively, you can lease the furniture from the leasing firm of your friend, Mr. James Grey. The annual leasing payment is $25,000 (paid at the end of the year). The economic life (and the leasing period) of the furniture is seven years. The leasing firm's tax rate is 28% and its pre-tax cost of debt is 6.80% pa. Your firm's tax rate is 25%. a. (10 Points) If your startup's pre-tax cost of debt is 7.20% pa, does this deal work for both of you? Please prove your point with your (NPV) work. b. (6 Point) Now let's assume that your startup's pre-tax cost of debt is 8.00% pa. Does this deal work for both of you now? Please prove your point with your (NPV) work

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