Ricks Construction (RC) needs a piece of equipment. RC can either lease the equipment or borrow from a local bank and buy the equipment. Assume RC's tax rate is 30%. If the company leased the asset on a 2-year lease, the payment would be $55 at the beginning of each year. If RC borrowed and bought, the bank would charge 10% interest on the loan. Assume the lease is classified as a guideline lease by the IRS. Suppose you calculate the PV of owning as -72.88.

What is the Net Advantage of Leasing (NAL) and should RC lease or buy the equipment?

A. NAL = -1.6 , RC should lease

B .NAL = -1.6 , RC should buy

C. NAL = -32.12 , RC should buy

D. NAL = -32.12, RC should lease