2. Leases and taxes CCA recapture forfeiture Leasing is a very important source of financing for certain companies' needs, including corporations and small- because, depending on the type of lease, the Canada Revenue Agency (CRA) allows the lessee to deduct the le interest payments on any debt used to finance the asset leased. businesses. This is the lessor can deduct a loss limits upon the sale of If a lease purchase option conveys a bargain purchase price option to the lessee, the lessee may be subject to the asset. Allied Logistics Ltd. is considering leasing new computer equipment that will cost $20,000 (including shipping and installation). The lease payment is $4,000 per year for four years, paid at the beginning of each year. Other information pertaining to the equipment and lease is as follows: Maintenance of $200 per year will be paid by the lessor. Allied's tax rate is 35%. The CCA rate on the equipment is 30%. Allied's cost of borrowing is 4.8%. Estimated residual value of the equipment at the end of four years is expected to be $4,000. Based on the preceding information, complete the following table: Value $14,933.94 Present value of the after-tax lease payments Present value of the CCA tax shield Present value of the after-tax maintenance costs Present value of the residual value The present value of the CCA tax shield makes leasing the equipment valuable to Allied Logistics. The present value of the after-tax maintenance costs makes leasing the equipment valuable to Allied. What is the net advantage to leasing (NAL) for Allied Logistics Ltd.? O $2705.27 $1,062.17 O $1,883.77