The machinery falls into the MACRS $3-$year class. $($The depreciation rates for Year $1$ through Year $4$ are equal to $0\mathrm{.}3333,0\mathrm{.}4445,0\mathrm{.}1481,$ and $0\mathrm{.}0741.)$

Under either the lease or the purchase, Big Sky must pay for insurance, property taxes, and maintenance.

The firm's tax rate is $25\%.$

The loan would have an interest rate of $16\%.$ It would be nonamortizing, with only interest paid at the end of each year for four years and the principal repaid at Year $4.$

The lease terms call for $$420,000$ payments at the end of each of the next $4$ years.

Big Sky Mining has no use for the machine beyond the expiration of the lease, and the machine has an estimated residual value of $$200,000$ at the end of the $4$ th year.

nearest dollar.

nearest dollar.