6. [Leases, tax effects, cash flows and deferred taxes] On Janu- ary 1, 2002, two identical companies, Caramino Corp. and Aglian ico, Inc., lease similar assets with the following characteristics: (i) Economic life is eight years. (ii) Lease term is five years. (iii) Lease payments of $10,000 per year are payable at the beginning of each year, with the first payment due on January 1, 2002. (iv) Fair market value is $48.000 (v) Each firm has an incremental borrowing rate of 8% and a tax rate of 40%. Caramino capitalizes the lease, whereas Aglianico uses the operating lease method. Both firms use straight-line depreciation for all assets on their financial statements Assume that both firms treat the lease as an operating lease on their tax returns. As- sume that each firm generates income before lease-related ex- pense and income taxes of $20,000 in 2002.

a. Compute earnings before interest and taxes and carings be- fore taxes for 2002 for each firm. Identify the sources of the difference.