Sutton Corporation,which Has a Zero Tax Rate Due to Tax

Multiple Choice

Sutton Corporation,which has a zero tax rate due to tax loss carry-forwards,is considering a 5-year,$6,000,000 bank loan to finance service equipment.The loan has an interest rate of 10% and would be amortized over 5 years,with 5 end-of-year payments.Sutton can also lease the equipment for 5 end-of-year payments of $1,790,000 each.How much larger or smaller is the bank loan payment than the lease payment? Note: Subtract the loan payment from the lease payment.

A) $177,169
B) $196,854
C) $207,215
D) $217,576
E) $228,455