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Suppose Procter and Gamble​ (P&G) is considering purchasing $15 million in new manufacturing equipment. If it purchases the​ equipment, it will depreciate it on a​ straight-line basis over the five​ years, after which the equipment will be worthless. It will also be responsible for maintenance expenses of $2.00 million per year.​ Alternatively, it can lease the equipment for  $3.5 million per year for the five​ years, in which case the lessor will provide necessary maintenance. Assume​ P&G?s tax rate is 30% and its borrowing cost is 7.5%. a. What is the NPV associated with leasing the equipment versus financing it with the lease equivalent​ loan? b. What is the​ break-even lease ratelong dash—that ​is, what lease amount could​ P&G pay each year and be indifferent between leasing and financing a​ purchase?

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