Your firm is considering leasing a new laser light. The lease lasts for 3 years. The lease calls for 4 payments of 12,000 per year with the first payment occurring immediately. The computer would cost $33,000 to buy and would be straight-line depreciated to a zero salvage value over 3 years. The actual salvage value is negligible because of technological obsolescence. The firm can borrow at a rate of 10%. The corporate tax rate is 40%.

What is the after-tax cash flow from leasing relative to the after-tax cash flow from purchasing in year 0?

a) $35,000

b) $25,800

c) $26,800

d) $38,500

e) None of these