Warf Computers needs specialized equipment for production. The company can buy the equipment from Clapton Acoustical Equipment for $5 million. . The equipment falls in the three-year MACRS depreciation class MACRS Depreciation Allowances Property Class 3-year 5-ye 7-year 20.00% 32.00% 19.20% 11.52% Year 33.33% 44.44% 14.82% 7.41% 14.29% 24.49% 17.49% 12.49% 8.93% 8.93% 8.93% 4.45% 11.52% 5.76% At the end of four years, market value of the equipment is expected to be $600,000 Alternatively, the company can lease from Hendrix Leasing. Lease contract calls for four annual payments of $1.3 million due at the beginning of the year. Security deposit of $300,000 will be returned when the lease expires. Warf Computers can issue bonds with a yield of 11 percent and the company has a marginal tax rate of 35%