JLB Corporation is attempting to determine whether to lease or purchase research equipment. The firm is in the $24\%$ tax$$ bracket, and its$$ after$-$tax cost of debt is currently $9\%.$ The terms of the lease and of the purchase are as$$ follows:

Lease$$Annual$$ end$-$of$-$year lease payments of $$$$25$ comma $000$ are required over the$$ three$-$year life of the lease. All maintenance costs will be paid by the$$ lessor; insurance and other costs will be borne by the lessee. The lessee will exercise its option to purchase the asset for $$$$4$ comma $500$ at termination of the lease. Ignore any future tax benefit associated with the purchase of the equipment at the end of year $3$ under the lease option.

Purchase$$The equipment costs $$$$60$ comma $000$ and can be financed with a $14\%$ loan requiring annual$$ end$-$of$-$year payments of $$$$25$ comma $844$ for three years. JLB will depreciate the equipment under MACRS using a$$ three$-$year recovery period. $($See LOADING... for the applicable depreciation$$ percentages.$)$ JLB will pay $$$$2$ comma $400$ per year for a service contract that covers all maintenance$$ costs; insurance and other costs will be borne by the firm. The firm plans to keep the equipment and use it beyond its$$ three$-$year recovery period.

a$.$ Calculate the after$-$tax cash outflows associated with each alternative. $($Hint: Because insurance and other costs are borne by the firm under both alternatives, those costs can be ignored here.$)$

b$.$ Calculate the present value of each stream, using the after$-$tax cost of debt.

c$.$ Which alternative$-$lease or purchase$-$would you recommend? Why?

Data table

a$.$ The after$-$tax cash outflow associated with the lease in year $1$ is $$19000.($Round to the nearest dollar.$)$

The after$-$tax cash outflow associated with the lease in year $2$ is $$,($Round to the nearest dollar.$)$

The after$-$tax cash outflow associated with the lease in year $3$ is $$23500.($Round to the nearest dollar.$)$

The after$-$tax cash outflow associated with the purchase in year $1$ is $!($Round to the nearest dollar.$)$