Calculate the economics of leasing or buying (70%)

Provide your recommend based on your calculation (30%)

The facts of the case are as follows:

A. The lease:

Duration (in years)

Annual cost (before tax)

B. Financing and the purchase:

Cost of the assets

The useful life of the asset (in years)

Debt agreement

financing as % of total cost of asset

Repayment term

Interest rate

Residual value of the asset

Capital cost allowance

C. Assumption:

1. Corporate income tax rate

D

10 years

$250,000

$1,000,000

10 years

100%

10 years

6%

0

25%

35%

E