Is there net advantage to leasing

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Reference no: EM131917982

Old Navy Ltd. is upgrading their manufacturing equipment. The equipment costs $590,000, and must be replaced in five years with no residual value at that time. It falls under Class 8 (CCA Rate 20%).The firm can borrow at 10.6%. The equipment can be leased for $150,000 annually paid at the beginning of each year. The tax rate is 25%.

Is there a net advantage to leasing? What option (lease or buy) should the company pursue?

Reference no: EM131917982

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