Lease vs$.$ Buy

Jones Business Services Company needs to acquire a new computer server for its network. Jones has two options. It can lease the server for five years for lease payments of $$110,000$ annually to be paid at the beginning of each year. The other option is to buy the machine for $$500,000$ with borrowed funds. Assume the loan would be for the entire cost of the server and would be for five years at an interest rate of $9\%.$ The server qualifies as five year property for depreciation purpose. The rate of depreciation is as follows:

Year $120\%$

Year $232\%$

Year $319\mathrm{.}2\%$

Year $411\mathrm{.}52\%$

Year $511\mathrm{.}52\%$

The marginal tax rate for the company is $35\%.$ It is assumed that the server would have a residual value at the end of year $5$ of $$100,000.$ Determine whether the company should lease or buy this server. Also, determine the after$-$tax interest rate at which the company would be indifferent between buying or leasing. Provide step by step instructions to deciding which is the better option.