Example: Lease-versus owning analysis XYZ could purchase a small office building for its sole use at a total price of 1.8 million of which 225,000 would represent land values and the balance of 1,575,000 value of the building. The cost of the building would be depreciated over 31.5 years. XYZ is in a 30% tax bracket. As an alternative to owning, an investor has approached XYZ and indicated willingness to purchase the same building and lease it to XYZ for 180,000 per year for a term of 15 years. XYZ would pay all real estate operating expenses which are estimated at 50% of the lease payments. XYZ has estimated that the property value would increase over the 15 year lease term and the building could be sold for 3 million at the end of 15 years. XYZ has also determined that if it purchases the property it could arrange financing with an interest only mortgage on the property for 1,369,000 at in interest rate of 10% with a balloon payment due after 15 years Required Should XYZ lease or own the property