WCF, Inc has decided to purchase new equipment at a cost of $3.2 million. The equipment will be straight-line depreciated over 4 years and at that time it will be worthless. The tax rate is 35 percent. Your bank has offered to finance the entire $3.2 million. The repayment plan will be $800,000 per year with an interest charge of 9 percent on the outstanding balance of the loan at the beginning of each year. Principal + interest payments are due at the end of each year. FCW Leasing has offered a lease payment of $950,000 per year due at the beginning of each of the years. Answer the following:

1. Should WCF lease or purchase the equipment?

2. What is the annual lease payment that will make WCF indifferent to whether it leases or not?

Can you please explain how to set the problem up in excel, its a very challenging question. It's a Finance class FIND 618