McKay Industries is negotiating a lease on a new piece of equipment that will cost $$300,000$ if purchased. The equipment falls into the MACRS $3-$year class and then sold, because McKay plans to move to a new facility at that time. The applicable MACRS depreciation rates are year $1=0\mathrm{.}33,$ year $2=0\mathrm{.}45,$ year $3=0\mathrm{.}15$ & year $4=0\mathrm{.}07.$ It is estimated that the equipment could be sold for $$50,000$ after $3$ years. A maintenance contract on the equipment would cost $$10,000$ per year, payable at the beginning of each year of usage. Conversely, McKay could lease the equipment for $3$ years for a lease payment of $$80,000$ per year, payable at the beginning of each year. The lease would include maintenance. McKay is in the $25\%$ tax bracket and it could obtain a loan to purchase the equipment at a before$-$tax cost of $12\%.$

a$.)$ Find the Net Present Value of the cost of owning the equipment.?

$(17$ marks$)$

b$.)$ Find the Net Present Value of the cost of leasing the equipment? $(6$ marks$)$

c$.)$ What is the Net Advantage to Leasing$($NAL$)?$ Should McKay buy or lease the equipment?

$(2$ marks$)$