XYZ Storage is evaluating a project with an expected life of 4 years. The project requires an investment in a piece of new equipment worth $400,000. The company is considering whether it should lease or borrow to purchase the equipment. The opportunity cost of borrowing for an asset which has a purchase price of $400,000 is 15% p.a. Other details of each alternative are provided as follows: Purchase: This equipment can be depreciated at 20% reducing balance if owned, and has an expected salvage value of $100,000 at the end of year 4. Lease: If the lease is in advance, there will be four payments of $145,000 made at the beginning of each year and a residual payment of $40,000 made at the end of the term, i.e., at the end of year 4. The company tax rate is 25%. Calculate the NPV of leasing and advise the company as to whether it should purchase or lease the equipment with payments made in advance?