Ringo Manufacturing is considering the purchase of a new machine for $80,000. The machine is expected to save the firm $15,000 before tax per year in operating costs over a 5-year period; and can be depreciated on a straight-line basis to a zero salvage value over its life.

Alternatively, the firm can lease the machine for $5,000 per year for 5 years, with the first payment due in 1 year.

The firm's before-tax cost of debt is 10%

d) Assume the before tax lease payment is $8,000 per year instead of $5,000 and the tax rate is 20%; and the purchase price change to $60,000, find the tax shield each year.