A company needs to change the machinery, an alternative is only available on lease, the payments are $26,000. During 5 years.

The other alternative is to purchase a more energy efficient machine that costs $180,000. It is depreciated in a straight line, at the end of its useful life it has no value.

Both machines save $22,000. Per year in electricity costs for 5 years.

The company has a tax rate of 32% and the discount rate is 25%.