An asset costs $480,000 and will be depreciated in a straight line manner over its three-year life. It will have no salvage value. The lessor can borrow at 5.5% and the lessee can borrow at 7%. The corporate tax rate is 25% for both companies.

What lease payment will make the lessee and lessor equally well off?

Assume the lessee pays no taxes and the lessor is in the 25 percent tax bracket. For what range of payments does the lease have positive NPV for both parties?