Moody Laker Inc. considers buying new equipment worth $$2$ million in its Hong Kong plant.It is possible for Moody Laker to be financed by the bank loan. It is also likely that Moody Laker seeks a financial lease arranged by an investment bank. As the CFO of Moody Laker, you are given the following information.

$1.$ The straight$-$line depreciation method with a salvage value of zero is usually employed by Moody Laker. The useful life is always assumed to be $4$ years.

$2.$ The tax rate for Moody Laker is $40\%.$

$3.$ The bank would charge an annual rate of $15\%$ if the loan is provided. Moody Laker

decides to settle this mortgage by four equal installments at the end of each year.

$4.$ The lease requires Moody Laker to pay the lease payment of $$500,000$ at the end of each year for $4$ years.

$5.$ Because the equipment is crucial for its operation, Moody Laker must purchase the property at the end of Year $4.$ According to the purchase option prescribed in the lease

contract, Moody Laker is allowed to acquire the equipment at $$300,000$ at the end of the lease term.

Required:

Evaluate the Net Present Value $($NPV$)$ for Moody Laker if it determines to borrow and buy the equipment.