Interprovincial Regional Airline (IRA) has decided to acquire a regional jet from an airplane manufacturer. The jet has an initial purchase price of $15 million. Company management now needs to determine whether it should buy or lease the jet. If IRA purchases the jet, there is a federal government one-time subsidy of $500,000 to apply to the purchase price of the jet. The company would finance the purchase with a $14.5 million bank instalment loan at an annual interest rate of 12% and 10 years to maturity. IRA would incur costs associated with maintenance and insurance of $300,000 per year, paid at the end of the year. If IRA acquires the jet by leasing from the airplane manufacturer, it will have to pay lease payments of $2.5 million per year over 10 years, with the lease payments payable in advance, at the beginning of each year. For the duration of the jet’s lease, the manufacturer would pay the maintenance and insurance costs. The salvage value of the jet after 10 years is expected to be $1 million. IRA has a corporate tax rate of 27%. Assume the CCA rate is 25%. The asset qualifies for the Accelerated Investment Incentive, and therefore 1.5 times the CCA can be claimed in the year of acquisition. Assume that when the jet is sold, there are still assets remaining in the CCA class and that the UCC balance is still positive after the deduction of the proceeds. Required: Determine whether IRA should purchase or lease the jet.