Speedway Solutions is contemplating a leasing arrangement to finance some construction equipment it needs for the next 3 years

Speedway Solutions is contemplating a leasing arrangement to finance some construction equipment it needs for the next 3 years. The equipment will be obsolete and worthless after 3 years. Speedway will depreciate the cost of the tools on a straight-line basis over its 3-year life. It can borrow $2,500,000, the purchase price, at 10% and buy the equipment, or it can make 3 equal end-of-year lease payments of $1,200,000 each and lease it. The loan obtained from the bank is a 3-year interest-only loan, with interest paid at the end of the year. Speedway's tax rate is 40%. Annual maintenance costs are estimated at $220,000 if it owned the equipment (beginning in year 1), but this cost would be paid by the lessor if it leases. What is the net advantage to leasing (NAL)?