Florida Imaging Group needs a piece of diagnostic equipment that costs $200,000. The company can either lease the equipment or borrow $200,000 from a local bank and purchase the equipment. The companys tax rate is 40 percent, and the equipment depreciation will be $100,000 per year. If Florida Imaging Group leases the asset on a two-year lease, the payment will be $110,000 at the beginning of each year. If the company borrows the money for the purchase, its after-tax cost of debt is 6%. Should Florida Imaging Group purchase or lease the equipment?

a) What is the NAL?

b) Should they purchase or lease the equipment?