OPTION 1: The initial purchase price of the machine is $30,000.The salvage value at the end of the useful life will be $4,000.Maintenance costs are $2,000 for the first year and are estimatedto increase by $200 per year. OPTION 2: The machine is leased foran initial payment of $2,000 plus annual payments of $3,500. Thereis no salvage value. Annual maintenance cost is $10,000. Put downthe present value of each of the items specified for each machineryoption in the table below. Assume an interest rate of 6% and auseful lifetime of 8 years. Show your calculations in the spacesbelow the table.

a.) Please show the steps.

PresentValue (PV) of Item
	Option 1	Option 2
PV of Purchase/Lease
PV of Salvage Value
PV of Maintenance
Total PV

b.) What is the annual equivalent cost of capital (capitalrecovery), over the 8-year lifetime, for the machine with thelowest present value calculated in the above table?

c.) What is the amount of money that you should invest now ifyou want to receive payments of $1,000 at the end of each year forten years with the receipt of the first payment starting threeyears from now? Assume interest rate is 5% compounded annually.

d.) Provide explanation on your calculation in part c(i).Include in your explanation the specific type of cash flow givenand the reason of why you have to derive the present or futureequivalent value at various time points.