Suppose that National Waferonics has before it a proposal for a four-year financial lease.

	Year 0	Year 1	Year 2	Year 3
Lease cash flow	+62,000	26,800	22,200	17,600

These flows reflect the cost of the machine, depreciation tax shields, and the after-tax lease payments. Ignore salvage value. Assume the firm could borrow at 10% and faces a 21% marginal tax rate.

a. What is the value of the equivalent loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. What is the value of the lease? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. Suppose the machines NPV under normal financing is $5,000. Should National Waferonics invest?

• Should invest

• Should not invest