SynSerge Limited Has Decided to Acquire a Machine, Which Will

Multiple Choice

SynSerge Limited has decided to acquire a machine, which will replace an existing piece of equipment. The company has the choice between leasing the new machine or purchasing it. The existing machine is currently worth $30 000, while the new machine would cost $405 850. With the new machine installed, SynSerge would reduce its costs by $86 500 a year. The new machine would have a useful life of 10 years, qualify for a 10% Investment Tax Credit (ITC) and have a salvage value after ten years of $45 000. This type of machine qualifies for a 30% CCA rate. For a 10-year lease the annual payment is expected to be $42 000 with the first payment due upon signing the lease contract. SynSerge's cost of capital is 10%, tax rate is 30% and the cost of raising long-term debt is estimated at 12%. What is the Net Present Value of the lease? Round your final answer tothe nearest dollar.

A) $55 817
B) $65 352
C) $47 227
D) $63 109