Reynolds Imaging needs a piece of equipment that costs $200 thousand. Reynolds can either lease the equipment or borrow $200 thousand from a local bank and buy the equipment. Reynolds tax rate is 40 percent and the equipment depreciation would be $100 thousand per year. If the company leased the asset on a 2-year lease, the payment would be $110 thousand at the beginning of each year. If Reynolds borrowed and bought, the bank would charge 10 percent interest on the loan.

A. What is the NAL?

B. Should Reynolds buy or lease the equipment?