Final answer:
Calculating the NPV of leasing versus buying involves comparing the present value of lease payments, tax shields, salvage value, and CCA recapture against the cost of buying the machine. However, complete information is required to perform the correct calculation, including the lease term and the exact lease payment schedule.
Step-by-step explanation:
The question is attempting to analyze the financial decision of leasing a machine versus buying it by calculating the Net Present Value (NPV) of the lease option. To find the NPV of leasing for ASB firm, we would need to take into account the cost of leasing, which includes the immediate lease payment and the subsequent 8 annual payments, and compare it to the cost of buying. However, the provided data is incomplete to perform a full NPV calculation as it doesn't specify the lease term or the exact timing and value of lease payments beyond the first year.
Assuming the lease payments are an annuity due (since the first payment is immediate), the annual payment's present value can be estimated using the present value of an annuity due formula, which adjusts the standard annuity present value for the extra period of time. The tax shields, salvage value, and CCA recapture have already been provided in present value terms.
To calculate the NPV of leasing, we would sum the present values of the lease payments (less any tax shields), the salvage value, and subtract any recapture and the cost of purchasing the machine. Lastly, we would compare this NPV of leasing against the NPV of buying (which might include the tax benefits of depreciation, for example) to make an informed decision.