Problem $21-12$ Debt Capacity

Montclair Manufacturing is considering leasing some equipment. The annual lease

payment would be $$705,000$ per year for seven years. The appropriate interest rate is $6$

percent and the company is in the $25$ percent tax bracket. What reduction in debt

capacity would occur if the company signs the lease? $($Do not round intermediate

calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

Answer is complete but not entirely correct.