Keating Co. is considering disposing of an equipment with a cost of $50,000 and accumulated depreciation of $40,000. Keating Co. can sell the equipment through a broker for $25,000, less a 5% broker commission. Alternatively, Gunner Co. has offered to lease the equipment from Keating for five years for a five year total of $48,750. Keating will incur repair, insurance, and property tax expenses estimated at $8,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. Keating's net differential effect on income from the five year lease alternative is

$17,000

$7,000

$27,000

$14,500