P$174$ Lease versus purchase JLB Corporation is attempting to determine whether to lease or purchase research equipment. The firm is in the $21\%$ tax bracket, and its after$-$tax cost of debt is currently $8\%.$ The terms of the lease and of the purchase are as follows:

Lease Annual end$-$of$-$year lease payments of $$25,200$ are required over the $3-$year life of the lease. All maintenance costs will be paid by the lessor; insurance and other costs will be borne by the lessee. The lessee will exercise its option to purchase the asset for $$5,000$ at termination of the lease.

Purchase The research equipment, costing $$60,000,$ can be financed entirely with a $14\%$ loan requiring annual end$-$of$-$year payments of $$25,844$ for $3$ years. The firm in this case will depreciate the equipment under MACRS using a $3-$year recovery period. $($See Table $4\mathrm{.}2$ for the applicable depreciation percentages.$)$ The firm will pay $$1,800$ 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 $3-$year recovery period.

a$)$ Calculate the after $-$tax cash outflows associated with each alternative.

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

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

I attached table $4\mathrm{.}2$

Please show all theTABLE $4\mathrm{.}2$ Rounded Depreciation Percentages by Recovery Year Using

MACRS for First Four Property Classes steps on how you got to the answer.