(1)The machinery falls into the MACRS 3-year class.
(2)Under either the lease or the purchase, Big Sky must pay for insurance, propery taxes, and maintenance.
(3)The firms tax rate is 40%.
(4)The loan would have an interest rate of 15%.
(5)The lease terms call for $400,000 payments at the end of each of the next 4 years.
(6)Assume that Big Sky Mining has no use for the machine beyond the expiration of the lease. The machine has an estimated residual value of $250,000 at the end of the 4th year.
What is the NAL of the lease?
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