Salvage value $40 000 End Year 4 Time Initial A-tax DTS A-tax NCF DCFPresent eriod Cost Foregone Salvage (@7%)Value Avoided Value Foregone 180000-35000 145000 145000 35000 13500 485000.935 -45348 35000 13500 485000.873 -35000-13500 485000816 -39576 4 -13500 -28000 415000.763 -31665 NPV S13930 Conclusion: NPV<0, borrow and purchase.Salvage Value $40 000 End Year 4 Time Period Initial Cost Avoided A-tax LP DTS Foregone A-tax Salvage Value Foregone NCF DCF (@ 7%) Present Value 0 180 000 -35 000 145 000 1 145 000 1 -35 000 -13 500 -48 500 0.935 -45 348 2 -35 000 -13 500 -48 500 0.873 -42 341 3 -35 000 -13 500 -48 500 0.816 -39 576 4 -13 500 -28 000 -41 500 0.763 -31 665 NPV = -$13 930 Conclusion: NPV < 0, borrow and purchase