Merrimack Power Company has decided to acquire a new equipment at a cost of $$400,000.$ The equipment has an expected life of $6$ years and will be depreciated using $5-$year MACRS with rates of $\mathrm{.}20,\mathrm{.}32,\mathrm{.}192,\mathrm{.}1152,\mathrm{.}1152,$ and $\mathrm{.}0576($note that $5-$year MACRS depreciation actually takes place over $6$ years$).$ There is no actual salvage value. Lowell Financial Services has offered to lease the equipment to Merrimack Power for $$90,000$ a year for $6$ years, with lease payment at the end of each year. Merrimack Power has a cost of equity of $10$ percent, a pre$-$tax cost of debt of $6$ percent, and a marginal tax rate of $20$ percent. Should Merrimack Power lease or buy?

Merrimack Power should lease because NPV $=$ $$10,560\mathrm{.}80$

Merrimack Power should buy because NPV $=$ $$15,633\mathrm{.}47$

Merrimack Power should buy because NPV $=$ $$38,127\mathrm{.}76$

Merrimack Power should lease because NPV $=$ $$16,377\mathrm{.}09$

Merrimack Power should buy because NPV $=$ $$5,971\mathrm{.}63$