12. A company can either purchase or lease a $650,000 machine with a useful life of 8 years. The machine could be fully depreciated on a straight-line basis over its useful life, at the end of which it would have no salvage value. The lease would involve 8 annual installments of $100,000, each due at the end of the year. The companys cost of debt is 10% and the tax rate is 20%. What is the expected increase in the firms debt capacity if it chooses to buy instead of lease?

a. $459,731.12 b. $330,431.74 c. $513,486.65 d. $650,000.00 e. $553,114.00