to finance some manufacturing tools it needs for the next 3 years, waldrop corp is considering a leasing aarangement. the tools will be obsolete and worthless after 3 years. the firm will depreciate the cost of the tools on a straight line basis over 3 year life. it can borrow 4800000 the purchase price at 10% and buy the tools or it can make 3 equal end of year lease payments of 2100000 each and leasse them. the loan obtained from the bank is 3 year simple interest loan with interest paid at the end of the year. the firms tax rate is 40%. Annual maintenace costs with ownership are estimated at 240000 but the cost would be borne by the lessor if it leases.

What is the PV of costs leasing