Eco$-$Systems, Inc. is a Lincoln, Nebraska$-$based manufacturer of efficient, renewable energy options for government units at all levels $($i$.$e$.,$ federal, state, county, city$),$ as well as private corporations and firms of all sizes.$$ To meet customer demand for solar panels, Eco$-$Systems is considering a new, more technologically$-$advanced solar panel fabricating machine for its Lincoln, Nebraska manufacturing facility.$$ To finance the cost of the solar panel fabricating machine, Eco$-$Systems has two options:$1)$ Buy:$$ Eco$-$Systems could borrow funds from the Nebraska Farmers & Merchants State Bank in Lincoln to fund the full cost of the fabricating machine;$$ or$,2)$ Lease:$$ Eco$-$Systems could lease the fabricating machine from the equipment vendor.$$As the Finance representative on the management team of Eco$-$Systems, you have been asked to complete the lease vs$.$ buy analysis for the solar panel fabricating machine.$$ After talking with the vendor of this machine and Eco$-$Systems bank, and after reviewing the in$-$house financial documents of Eco$-$Systems, you have assembled the following information for this analysis:$$ If purchased, the cost at t $=0$ of the solar panel fabricating machine is $$1,500,000.$ Whether Eco$-$Systems decides to lease or buy the machine, Eco$-$Systems will be responsible for the insurance, property tax, and maintenance costs for the machine.$$ Eco$-$Systems has a $40\%$ effective income tax rate.$$ If purchased, Eco$-$Systems would depreciate the machine using the $3-$year class Modified Accelerated Cost Recovery System $($MACRS$)$ depreciation rates.$$ If purchased, a loan for $100\%$ of the cost of the machine can be obtained from Nebraska Farmers & Merchants State Bank, at an interest cost of $15\%$ per year.$$ The loan is non$-$amortizing and would have a $4-$year life.$$ Given this, Eco$-$Systems would then pay Interest Expense on the $$1,500,000$ loan principal on December $31$ in each of the $4$ years that the loan is outstanding.$$ The $$1,500,000$ loan principal would be repaid to the Bank at the conclusion of the loan term, on December $31,$ Year $4.$ If leased, Eco$-$Systems would make a $$400,000$ lease payment at the end of each of the $4$ years during the lease term.$$ The solar panel fabricating machine will not be used by Eco$-$Systems after December $31,$ Year $4.$ However, on that date $($Dec$.31,$ Year $4),$ the machine is assumed to have an estimated residual value of $$250,000,$ for which it will be sold on that date.$$Given this information, please complete the following questions In the excel sheet about this lease vs$.$ buy situation that Eco$-$Systems is facing:$1.$ What is the Net Present Value $($NPV$)$ of the solar panel fabricating machine if purchased and depreciated over the $4-$year term?$$

$2.$ What is the Present Value $($PV$)$ of the cost of leasing the solar panel fabricating machine for the $4-$year lease term?$3.$ Given your calculations for owning the machine in Question #$1$ and your calculations for leasing the machine in Question #$2,$ what is the Net Advantage to Leasing $($NAL$)$ for this situation?$$

$4.$ Do you recommend that Eco$-$Systems lease or buy the solar panel fabricating machine?$$ Please describe.