High electricity costs have made Farmer Corporation's chicken$-$plucking machine

economically worthless. Only two machines are available to replace it$.$ The International

Plucking Machine $($IPM$)$ model is available only on a lease basis. The lease payments will

be $$80,000$ for five years, due at the beginning of each year. This machine will save

Farmer $$29,000$ per year through reductions in electricity costs. As an alternative,

Farmer can purchase a more energy$-$efficient machine from Basic Machine Corporation

$($BMC$)$ for $$365,000.$ This machine will save $$32,000$ per year in electricity costs. A local

bank has offered to finance the machine with a loan. The interest rate on the loan will be

$10$ percent on the remaining balance and will require five annual principal payments of

$$73,000.$ Farmer has a target debt$-$asset ratio of $67$ percent and a tax rate of $21$ percent.

After five years, both machines will be worthless. The machines will be depreciated on a

straight$-$line basis.

a$.$ What is the NAL of leasing? $($Do not round intermediate calculations and round your

answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ How much debt is displaced by this lease? $($Do not round intermediate calculations

and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$