The Discount Store Is Trying to Decide Whether to Lease

The Discount Store is trying to decide whether to lease or buy some new equipment. The equipment costs $42,000, has a 4-year life, and will be worthless after the 4 years. The cost of
Borrowed funds is 9.5 percent and the tax rate is 34 percent. The equipment can be leased for
$11,400 a year. What is the amount of the after-tax lease payment?

A) $3,876
B) $7,524
C) $8,126
D) $8,360
E) $9,814