The Burger Joint Is Considering Either Leasing or Buying a New

The Burger Joint is considering either leasing or buying a new freezer unit. The lessor will charge $13,300 a year for a 4-year lease. The purchase price is $38,000. The freezer has a 4-year life after
Which time it is expected to have a resale value of $12,000. The Burger Joint uses straight-line
Depreciation, borrows money at 7.5 percent, and has sufficient tax loss carryovers to offset any
Potential taxable income the firm might have over the next 5 years. What is the net advantage to
Leasing?

A) -$2,064
B) -$1,820
C) $218
D) $2,407
E) $3,735