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 $97,000 for five years, due at the beginning of each year. This machine will save Farmer $37,500 per year through reductions in electricity costs. As an alternative, Farmer can purchase a more energy-efficient machine from Basic Machine Corporation (BMC) for $450,000. This machine will save $40,500 per year in electricity costs. A local bank has offered to finance the machine with a $450,000 loan. The interest rate on the loan will be 9 percent on the remaining balance and will require five annual principal payments of $90,000. Farmer has a target debt-to-asset ratio of 54 percent and a tax rate of 22 percent. After five years, both machines will be worthless. The machines will be depreciated on a straight-line basis.

What is the NAL of leasing?

How much debt is displaced by this lease?