I need help with an excel sheet to answer this question. I need to follow where the answer comes from. What does the 40% have to do with the question? Also, how does the depreciation differ from leasing to buying?

To finance some manufacturing tools it needs for the next 3 years, Waldrop

Corporation is considering a leasing arrangement. The tools will be obsolete and

worthless after 3 years. 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

10% and buy the tools, or it can make 3 equal end-of-year lease payments of

$1,700,000 each and lease them. The loan obtained from the bank is a 3-year

simple interest (non-amortized) loan, with interest paid at the end each year and the

principal of the loan repaid at the end of Year 3. The firm's tax rate is 40%. What

is the net advantage to leasing (NAL)? Would you Lease or Buy?