FINC, Inc. has just finished a capital budgeting analysis of a new piece of equipment, and it has a very attractive NPV. They are now considering whether to buy or lease the machine. The equipment costs $1,650,000, has a life of three years, and will have no salvage value after that life. If the company purchases the machine, it will be depreciated by the straight-line method over three years. They have contacted a rental agency, and they offer annual lease payments of $625,000 for three years (payable at the end of the year). FINCs (before-tax) cost of borrowing is 5%, and the marginal tax rate is 20%. What is the Net Advantage to Leasing (NAL) under these terms? ____________ Should the FINC lease the equipment?

• $11,181: No

• -$11,181: Yes

• -$1,361,624; No

• -$42,806; No

• $42,806; Yes