Your company needs a new packaging machine. It has an economic life of 7 years and is to be depreciated linearly to zero, since it has no salvage value. You can buy it for $250,000 from the manufacturer or lease it for $49,673 per year.

Your tax rate is 23% and your after-tax cost of debt is 14%.

a. What is the net advantage to leasing?

b. What is the net advantage to leasing if the company doesn't pay any taxes?