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The AMC Gremlin has a sticker price of $95,000. You are trying to choose between a lease or a loan and you wonder if there
The AMC Gremlin has a sticker price of $95,000. You are trying to choose between a lease or a loan and you wonder if there is a tax advantage to the lease. The lease rate is 5.9%. The term of the lease is four years. The buyout is $52,250 at the end of the lease. The lease payments are monthly. With leases, the lessee pays sales tax on all payments including the buyout. The loan charges the same rate as the lease and payments are monthly over a 4-year term. With loans, the sales tax is paid on the price of the car and forms part of the loan principal. What is the difference between the tax on the lease and the loan? (Discount all taxes to time zero, the date of the lease/loan, and assume a sales tax rate of 13%.) The AMC Gremlin has a sticker price of $95,000. You are trying to choose between a lease or a loan and you wonder if there is a tax advantage to the lease. The lease rate is 5.9%. The term of the lease is four years. The buyout is $52,250 at the end of the lease. The lease payments are monthly. With leases, the lessee pays sales tax on all payments including the buyout. The loan charges the same rate as the lease and payments are monthly over a 4-year term. With loans, the sales tax is paid on the price of the car and forms part of the loan principal. What is the difference between the tax on the lease and the loan? (Discount all taxes to time zero, the date of the lease/loan, and assume a sales tax rate of 13%.)
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