The Myers Inc. is considering the purchase of a new machine for $36500 The machine is expected to save the firm $12,800 per year in operating costs over a 5-year period, and can be depreciated on a straight-line basis to a zero salvage value over its life. Alternatively, the firm can lease the machine from Stuart Leasing Company for $6,700 per year for 5 years, with the first payment due in 1 year. The Myers' tax rate is 25% and the before-tax cost of debt is 9%. The tax rate of Stuart Leasing is 36%.

a. Using NPV analysis, should Myers lease or buy the machine? b. Calculate the maximum lease payment that Myers can pay. c. Calculate the break-even lease payment for Stuart Leasing.