ABC company is making decision of leasing or purchasing equipment. Assuming Y Corporation sell ABC the equipment at a price $8 million. 40% depreciation of equipment for the first year, and 20% for each of the remaining three years. The salvage value of equipment is expected to be 0.

Besides, the equipment can be leased from X corporation. Four annual lease payments of $1.9 million are settled at the beginning of each year. ABC can raise capital by issuing bonds with a yield of 15 percent, and the tax rate for ABC is set to be 30 percent.

Show the cash flows of each year and the calculation of NAL with PVIFA.