After a critical analysis of the purchase options, we have narrowed our acquisition of the proposed factory machine to two candidate, KMP Leasing Company and GML Leasing Corporation.

Below are the details of responses from the shot listed companies:

Lease Terms KMP Leasing Company

Purchase Price of machine $ 200000

Lease term 7 years

Estimated useful life of asset 10 years

Scrap value as a percentage of purchase price 20%

Depreciation method - straight method

Lease payments per year $33000 Marginal tax rate 21%

Current borrowing rate 7%

Determine the Net Present Value (NPV ) for each lease term using the after tax cost of borrowing ( marginal tax rate ) , and which lease term has the best deal for the company?