The Big Company is considering the purchase of a new machine for $45,000 that has a 3 year MACRS life (own for 2 years). The machine will require maintenance of $7000 per year for two years (payable at the beginning of the year) and will be sold at the end of the second year for $15,000. Or the company could lease the equipment for $25,000 per year for two years payable at the beginning of each year. If their cost of debt is 8% and tax rate is 25%.

Calculate the present value of costs for buying or leasing and choose which option the company should take.