Cayman Productions Is Considering Either Leasing or Buying Some New

Cayman Productions is considering either leasing or buying some new underwater photographic equipment. The lessor will charge $26,500 a year for a 2-year lease. The purchase price is $48,600. The equipment has a 2-year life after which time it will be worthless. Cayman uses straight-line depreciation, borrows money at 8 percent, and has sufficient tax loss carryovers to offset any taxes which otherwise might be owed for the next 4 years. What is the net advantage to leasing?

A) -$1,315
B) -$1,298
C) $1,343
D) $1,406
E) $1,457