Lease or Buy Question on DF for section B

Hello ,

I have come across the below question for Lease to Buy practice and I am struggling to understand how they have come to DF @ 7% as 1.935 and 1.689 for years 0-1 and 2-3 respectively in Section B for Leasing Finance Option.

Would you be able to clarify, please?

QUESTION:
A new project is being considered:

The asset costs $200,000 on the first day of a new accounting period.

The scrap value is $25,000 on the last day of the next accounting period.

Operating inflows are $150,000 for two years.

The tax rate is 33% and taxes are paid one year in arrears.

The company’s WACC is 10%.

Tax-allowable depreciation is at 25% on a reducing balance basis with a balancing adjustment in the year of disposal.

Finance options:

(1) using a bank loan at a 10.5% interest rate; or

(2) leasing for $92,500 a year in advance for two years (lease payments are tax allowable).

Required:

Determine the operational benefit of the project.
Determine how the project should be financed. Hint: Prepare a separate TAD working.
Decide whether the project is worthwhile.

(2) Leasing Flows

Time Cash flow Narrative DF @ 7% PV
$ $
0–1 (92,500) Lease payments 1.935 (178,988)
2–3 30,525 Tax relief thereon* 1.689 51,557
PV of leasing flows (127,431)

Thank you in advance for you help.