Step 2 - Set up a depreciation table for owning:
	Depreciable	Recovery	MACRS	MACRS		Depreciation
Year	basis	percentage	Depreciation	Book value	Tax rate	Tax savings
1	$0	0%	$0	$0	0%	$0
2	$0	0%	$0	$0	0%	$0
3	$0	0%	$0	$0	0%	$0
4	$0	0%	$0	$0	0%	$0
Total		0%	$0
Step 3 - Calculate the tax on the residual value
The tax on the residual value is (Residual value - MACRS book value) X tax rate:
	Residual value		$0
	MACRS book value		$0
	Tax rate		0%
	Tax on residual value =		$0
	If residual value > MACRS book value, then capital gain and tax paid
	If residual value < MACRS book value, then capital loss and taxes reduced
				HCA Mission Healthcare needs a piece of diagnostic equipment that costs $1 million. Mission can either lease the equipment or borrow $1 million from a local bank and buy the equipment. Mission's tax rate is 30 percent, and the equipment falls into the three year class. If Mission leases the equipment, the payment would be $260 thousand per year for four years, payable at the beginning of each year. If Mission borrows and buys, its bank would charge 6 percent interest (compounded annually) on the loan. Should Mission buy or lease the equipment?