2. Huston leases looms from Tangers. The cost of the looms is $30,000. The yearly beginning of year lease payments are $8,000 per year. The lease will last for three years. The company uses straight line depreciation over five years to depreciate the equipment. Tangers pays $750 a year in property taxes (end of year) due to Tangers owning the equipment. The estimated salvage value is $4,000. The corporate tax rate for both firms is 40%. The cost of borrowing is 10% and the required rate of return is 15%

Find the NAL of the Lease.

Should Huston lease the equipment? Why?