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5. Deep Lake Drilling (DLD) is considering the purchase of a new floating drill at...

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Finance

5. Deep Lake Drilling (DLD) is considering the purchase of a new floating drill at a cost of $800,000. The equipment has a useful life of 4 years and qualifies for a 30% CCA rate. DLD has a tax rate of 25% and it can borrow at 7%. DLD can lease the equipment from Reliable Leasing Company (RLC). The lease payments will be $215,000 per year to be paid at the beginning of the year. Suggestion: For each of Parts (a), (b), (c), and (d), try to use a table similar to the one below after adding or deleting rows or columns as desirable.

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What is the net advantage to leasing (NAL) for DLD? (6 marks)

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