Nelson's Interiors Is Trying to Decide Whether to Lease or Buy

Nelson's Interiors is trying to decide whether to lease or buy some new equipment. The equipment costs $64,000, has a 5-year life, and will be worthless after the 5 years. The equipment will be
Replaced. The cost of borrowed funds is 10.5 percent and the tax rate is 35 percent. The equipment
Can be leased for $13,200 a year. What is the amount of the after-tax lease payment?

A) $7,370
B) $7,550
C) $8,375
D) $8,580
E) $9,481