Kohers Inc. is considering a leasing arrangement to finance somemanufacturing to

Kohers Inc. is considering a leasing arrangement to finance somemanufacturing tools that it needs for the next 3 years. The toolswill be obsolete and worthless after 3 years. The firm willdepreciate the cost of the tools on a straight-line basis overtheir 3-year life. It can borrow $4800000 the purchase price at10% and buy the tools or it can make 3 equal end-of-year leasepayments of $2100000 each and lease them. The loan obtained fromthe bank is a 3-year simple interest loan with interest paid atthe end of the year. The firms tax rate is 40%. Annual maintenancecosts associated with ownership are estimated at $240000 but thiscost would be borne by the lessor if it leases. What is the netadvantage to leasing (NAL) in thousands?