#$2$ below: Provide your answers under the specific question you are answering. You need to show all your work, including financial calculator keystrokes for full credit. $($Financial Calculator Keystroke Example: N$=1,\frac{\text{I}}{Y}=10,PV=100,PMT=0,CPTFV=110$;$CF0=0,C01=110,F01=1,NPV,I=10,CPTNPV=100.)$

$2.$ MGM Hospital plans to obtain a new MRI that costs $$1\mathrm{.}25$ million and has an estimated four$-$year useful life. It can obtain a bank loan for the entire amount and buy the MRI, or it can obtain a guideline lease for the equipment. Assume that the following facts apply to the decision:

The MRI falls into the three$-$year class for tax depreciation, so the MACRS allowances are $0\mathrm{.}33,0\mathrm{.}45,0\mathrm{.}15,$ and $0\mathrm{.}07$ in Years $1$ through $4,$ respectively.

Estimated maintenance expenses are $$65,000$ payable at the beginning of each year whether the MRI is leased or purchased.

Big Sky$\text{'}$s tax rate is $30$ percent.

The bank loan would have an interest rate of $9$ percent.

If leased, the lease payments would be $$400,000$ payable at the end of each of the next four years.

The estimated residual $($and salvage$)$ value is $$225,000.$

a$.$ What are the NAL and IRR of the lease? Interpret each value.

b$.$ Assume now that the salvage value estimate is $$300,000,$ but all other facts remain the same. What is the new NAL? The new IRR?