Bexar Mining Company must install $990,000 of new machinery in its San Antonio mine. It can obtain a bank loan for 100% of the purchase price, or it can lease the machinery. Assume that the following facts apply. (1) The machinery falls into the MACRS 3-year class (Depn rates: 33.33%, 44.45%, 14.81%, 7.41%). (2) Under either the lease or the purchase, Bexar must pay for insurance, property taxes, and maintenance. (3) The firms tax rate is 35%. (4) The loan would have an interest rate of 12%. It would be non-amortizing, with only interest paid at the end of each year for 4 years and the principal repaid at Year 4. (5) The lease terms call for $270,000 payments at the beginning of each year for 4 years. (6) Bexar Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of $150,000 at the end of the 4th year. What is the NAL of the lease?

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