Cool Treats Is Considering Either Leasing or Buying a New

Cool Treats is considering either leasing or buying a new freezer unit. The lessor will charge $12,600 a year for a 2-year lease. The purchase price is $32,000. The freezer has a 2-year life after which time it is expected to have a resale value of $10,000. Cool Treats uses straight-line depreciation, borrows money at 8 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) $167
B) $384
C) $573
D) $710
E) $957