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Hack Wellington Co. (HWC) is consideringthe purchase of new manufacturing equipment that will cost $25,000 (including shipping and installation). HWC can take out a four-year, $25,000 loan to pay for the equipment at an interest rate of 6.00%. The loan and purchase agreements will also contain the following provisions: The annual maintenance expense for the equipment is expected to be $250. The equipment has a four-year depreciable life. The Modified Accelerated Cost Recovery Systems (MACRS) depreciation rates for a three-year asset are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Te corporate tax rate for HWC is 45%. . Note: Hack Wellington Co. (HWC) is allowed to take a full-year depreciation tax-saving deduction in the first year. Based on the preceding information, complete the following tables: Value Annual loan payment will be: Annual tax savings from maintenance will be: Year 1 Year 2 Year 3 Year 4 Tax savings from depreciation Net cash low 1 L Thus, the net present value (NPV) cost of owning the asset will be -$14,445 O -$34,382 O $18,083 0 -$14,945 Hack Wellington Co. (HWC) has been offered an operating lease on the same equipment. The four-year lease requires end-ofyear payments of $1,0DD, and the firm will have the option to buy the asset in four years for $5,5DD. The firm will want to use the equipmentlonger than four years, so it plans to exerdise this option. All maintenance will be provided by the lessor. What is the NPV cost of leasing the asset? 0 -$1,546 0-$6,859 0 -$8,574 O -$23,454 Should HWClease or buy the equipment? O Lease OBuy

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