Recommendation for original option - lease or buy 2 Recommendation for scenarios: Change in payments 2 Changes in salvage value 2 Security deposit impact 2 Q6 Lease Classification Marks Student Determines correct leasing classification 4 Discusses impact on financial statements 4 Total 100 0

Growth Calculation 2 Dividend/Stock calculation 2 Calculation of $ amount of Common Equity 2 Calculation of weight in capital of Common Equity 2 Weighted Cost of Debt After-tax cost of debt 2 Calculation of weight in capital of Debt 2 Weighted Cost of Preferred Equity Cost of Preferred Stock 2 Calculation of weight in capital of Preferred Stock 2 WACC Calculation completed 4 Q4 Financial Forecast Marks Initial Analysis WACC utilized as discount rate 2 Appropriate year term applied 2 Correct use of initial investment 2 After-tax leasing payments calculated 2 Present value of after-tax leasing payments 2 Tax Shield calculation 6 Present value of Salvage value 2 Lease payments at beginning of period 2 Scenario Analysis A. Change in payments from beginning to end 4 B. Changes in Salvage Value 4 C. Impact of Security Deposit with end payments 4 D. Breakeven lease payment 4 Q5 Evaluation of Leasing Options Marks

Grading You will be assessed in accordance with the following rubric: Q1 Title Page, Readability, Format, Spelling and Grammar Marks Student Title Page, Readability, Format, Spelling & Grammar 12 Q2 Qualitative Discussion of Leasing vs. Purchasing Marks Student Advantages vs. Disadvantages 4 Reasons for Lessor to lease (at least three) 4 Reasons for Lessee to lease (at least three) 4 Q3 WACC Calculation Marks Student Weighted Cost of Equity ROE calculation 2 Retention calculation 2

You will also be required to calculate the weighted average cost of capital (WACC). A supplementary scenario analysis of leasing options is required. How to Proceed Create a title page with your purchase versus lease report name and author identification. Explain the advantages and disadvantages of leasing, including the possible reasons, right or wrong, that would make a company lease an asset (from the lessor and lessee perspective). Calculate the weighted average cost of capital (WACC) to use in your net advantage to leasing (NAL) analysis, rounding to the nearest one tenth of a percent. Prepare your Net Advantage to Leasing analysis of the investment using the WACC as the discount rate. In addition, determine the impacts of the sensitivity analysis in the case, including changes in payments from beginning of period to end; changes in salvage value; security deposit; and the break-even lease payment.

It is 1st. You are a senior analyst at Canada Hardware Inc. (CHI), one of the top hardware, sports, and apparel providers in Canada with hundreds of stores across Canada. The CEO of Canada Hardware, Tony Stark, has reached out to you to look at two options regarding an investment, building on your analysis from Assignment 1 and Assignment 2. Purpose Under this case approach, you will demonstrate your ability to undertake a detailed analysis to evaluate the buy versus lease options for an investment proposal, on a qualitative and quantitative basis.