Your company wants to purchase a new wax pouring machine for your candle-making business. The machine costs $240,000. It will be obsolete in three years with zero salvage value. Your options are:

1. To borrow & buy the machine, at an interest rate on debt of 10%, or;
2. Lease the machine.

If you lease, the lease payments are $90,000 per year, payable at the beginning of each year. If you buy the sequencer, you will use a CCA rate of 30%, calculated using the Accelerated Investment Incentive Method, and the asset pool will remain open after the machine becomes obsolete. The tax rate is 30%.

In general, which of the following statements are correct with respect to leasing?

Leasing is most advantageous when the Lessee has a low tax rate and the Lessor has a high tax rate

Leasing is most advantageous when the Lessee has a high tax rate and the Lessor has a low tax rate

The true value of leasing arises due to the fact that leases do NOT have to appear on the Balance Sheet of the Lessee (if it is an Operating Lease)

All of the above are true

Only a) and c) are true