The Blue Goose Is Trying to Decide Whether to Lease

The Blue Goose is trying to decide whether to lease or buy some new refrigeration equipment for the restaurant.The equipment costs $63,000,has a 7-year life and will be worthless after the 7 years.The cost of borrowed funds is 8.4 percent and the tax rate is 32 percent.The equipment can be leased for $9,800 a year.What is the amount of the annual depreciation tax shield if the firm uses straight-line depreciation?

A) $2,880
B) $4,300
C) $7,500
D) $8,333
E) $9,000