Calculate the nal for abc

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ABC company is trying to decide whether to lease or buy a new computer-assisted drilling system for its oil exploration business. Management has decided that it must use the system to stay competitive. This system will provide $3 million in annual pre-tax cost savings. The system costs $10 million and will be depreciated straight-line to zero over five years. The company tax rate is 30%. The company can borrow at 10%. LLC Company has offered to lease the computer-assisted drilling system to ABC for payments of $2.1 million per year. LLC policy is to require its lessees to make payments at the beginning of the year.

Calculate the NAL for ABC

Reference no: EM132678428

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