The ABC Company is trying to decide whether to lease or buy a new computer-assisted drilling system for its oil exploration business. Management has decided that it must use the system to stay competitive; it will provide $1.2 million in annual pretax cost savings. The system costs $6.7 million and will be depreciated straight-line to zero over 4 years. ABC 's tax rate is 35 percent, and the firm can borrow at 11 percent. XYZ Leasing Company has offered to lease the drilling equipment to ABC for payments of $1,750,000 per year. XYZ's policy is to require its lessees to make payments at the start of the year. XYZ requires ABC to pay a $270,000 security deposit at the inception of the lease. a) What is the NAL of leasing the equipment? Should ABC lease? ( 15 marks) b) What happens to the NPV of leasing if the tax rate increases