The Blank Button Company is considering the purchase of a new machine for $30,000. The machine is expected to save the firm $12,500 per year in operating costs over a 5 year period,and can be depreciated on a straight-line basis to a zero salvage value over its life. Alternatively,the firm can lease the machine for $6,500 per year for 5 years,with the first payment due in 1 year. The firm's tax rate is 34%,and its cost of debt is 10%. Calculate the NPV of the lease versus the purchase decision. Calculate the reservation payment of the lessee.

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The Answer of The Blank Button Company is considering the purchase of a new machine for $30,000. The machine is expected to save the firm $12,500 per year in operating costs over a 5 year period,and can be depreciated on a straight-line basis to a zero salvage value over its life. Alternatively,the firm can lease the machine for $6,500 per year for 5 years,with the first payment due in 1 year. The firm's tax rate is 34%,and its cost of debt is 10%. Calculate the NPV of the lease versus the purchase decision. Calculate the reservation payment of the lessee.

The Blank Button Company Is Considering the Purchase of a New