J&K Enterprises Is Considering Either Leasing or Buying Some New

J&K Enterprises is considering either leasing or buying some new equipment. The lease payments would be $3,800 a year. The purchase price is $19,900. The equipment has a 6-year life after which it is expected to have a resale value of $2,100. Your firm uses straight-line depreciation, borrows money at 11.5 percent, and has a 32 percent tax rate. What is the aftertax salvage value of the equipment?

A) $1,407
B) $1,428
C) $1,471
D) $1,476
E) $1,512