White River Minerals must install $$5,600,000$ of new machinery in its Ontario mine. It can finance the equipment purchase by either leasing or taking out a bank loan. The finance department will use the following information in analyzing his decision.

$$ Maintenance and insurance is $$45,000$ per year.

$$ The machine is expected to result in of cost savings of $$250,000$ per year.

$$ Lease terms: $$1,500,000$ per year for a $4-$year lease.

$$ The machine is expected to have no use to White River Minerals beyond the life of the lease. The machine is expected to have a residual value of $$750,000$ at the end of the lease.

$$ The machine falls into asset Class $38$ and has a CCA rate of $30\%.$

$$ The firm$$s tax rate is $26\%.$

$$ The fixed interest rate on the loan is $10\%,$

QUESTIONS:

A$)$ Calculate the NAL $($show all calculations$).$

B$)$ Should the firm lease or borrow$/$buy$,$

C$)$ Indicate which of the inputs into your NAL calculations would be the most sensitive to not materializing i$.$e$.,$ projections does not happen $($elaborate$)?$