South Inc. is a manufacturing firm that needs a new machine for its operation. It can either purchase the machine for $375,000 or lease it from SuperLease Inc. for 20 annual lease payments (paid at the beginning of the year) of $28,000. The machines has economic life of 20 years and CCA rate of 20%. The salvage value depends on whether it is owned by South or SuperLease. Since SuperLease has a better access to the resale market, the salvage value is expected to be $12,500, which is $2,500 more than the salvage value if South owns it. SuperLease does not have any other asset in the asset class and South always has a positive UCC in the asset class. The costs of debt for South and SuperLease are 10% and 7% respectively. The tax rates for South and SuperLease are 25% and 20% respectively. a. Calculate the NPV of leasing for South and SuperLease. b. What is the range of annual lease payments that makes leasing acceptable to both of them?