Angie corporation is evaluation whether to leave or purchase equipment. Its tax rate is 30 percent. If the company purchases equipment for $2,000,000 it will depreciate it over 4 years using straight-line depreciation. No salvage value is expected. The company enters into a 4-year lease, the lease payment is $600,000 per year, payable at the beginning of each year. If the company purchases the equipment it will borrow from its bank tat an interest rate of 10 percent.

Calculate the cost of purchasing equipment.

Calculate the net advantage to leasing. Should the company purchase or lease the equipment.