RonCo Company Is Considering a Recycling Project

RonCo Company is considering a recycling project.The project will result in a significant decrease in their garbage disposal costs.The acquisition cost of the recycling machine is $100,000.The present value of the depreciation tax shield (CCA) is $35,000 and the machine is expected to have a zero salvage value.The firm can lease the machine instead of buying it - the present value of the before-tax lease payments is $60,000 and the present value of the tax savings from the lease payments is $20,000.Should the firm lease the recycling machine and why or why not?

A) Yes, the NPV of leasing is $60,000.
B) Yes, the NPV of leasing is $25,000.
C) No, the NPV of leasing is −$40,000.
D) No, the NPV of leasing is −$175,000.