Kohers Inc. is considering a leasing arrangement to finance some
  manufacturing tools that it needs for the next 3 years. The tools will be
  obsolete and worthless after 3 years. The firm has the option to buy these
  tools. The firm will depreciate the cost of the tools on a straight-line
  basis over their 3-year life. It can borrow $4,800,000, the purchase price,
  at interest rate of 10% and buy the tools. The loan payments would be made at
  the end of each year. If it decides to lease or it can make 3 equal
  end-of-year lease payments of $2,100,000 each and lease them. The loan
  obtained from the bank is a 3-year simple interest loan, with interest paid
  at the end of the year. The firm's tax rate is 40%. The Total Cash Outflows
  from the Cost of Purchase are the following: (Year 1)+208; (Year 2) +208;
  (Year 3) -4,592; all occurring at the end of respective years. Calculate the
  leasing cash outflows, and compare the Present Values. What is the net
  advantage to leasing (NAL), in thousands? (Suggestion: Delete 3 zeros from
  dollars and work in thousands.)

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