Your Firm Needs to Either Buy or Lease $230,000 Worth

Your firm needs to either buy or lease $230,000 worth of vehicles. These vehicles have a life of 4 years after which time they are worthless. The vehicles belong in CCA class 10 (a 30% class) and can be leased at a cost of $68,000 a year for the 4 years. The corporate tax rate is 34% and the cost of debt is 10%.

What is the after-tax cost of debt?

A) 3.4%
B) 4.3%
C) 5.8%
D) 6.6%
E) 7.4%