1. To finance some manufacturing tools it needs for the next 3 years, Waldrop Corporation is considering a leasing arrangement. The tools will be obsolete and worthless after 3 years. The firm will depreciate the cost of the tools on a straight-line basis over their 3-year life. It can borrow $4,800, the purchase price, at 10% and buy the tools, or it can make 3 equal end-of-year lease payments of $2,100 each and lease them. The loan obtained from the bank is a 3-year simple interest loan, with interest paid at the end of the year. The firm's tax rate is 40%. Annual maintenance costs associated with ownership are estimated at $240. What is the the Year 1 cost of owning? [Hint: Be sure to consider interest expenses, maintenance costs, and deprecation.]

   	a.	$208
   	b.	$1168
   	c.	$1072
   	d.	-$80