High electricity costs have made Farmer Corporations 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 $87,000 for five years, due at the beginning of each year. This machine will save Farmer $32,000 per year through reductions in electricity costs. As an alternative, Farmer can purchase a more energy-efficient machine from Basic Machine Corporation (BMC) for $415,000. This machine will save $36,000 per year in electricity costs. A local bank has offered to finance the machine with a $415,000 loan. The interest rate on the loan will be 7 percent on the remaining balance and will require five annual principal payments of $83,000. Farmer has a target debt-to-asset ratio of 65 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., 32.16.)

b. How much debt is displaced by this lease? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)