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What is the net advantage to leasing

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Problem 1: Barney & Stone Limited is about to purchase $350,000 of capital assets. The assets have an expected lifespan of five years, and will be worthless after that time. The appropriate CCA rate is 35%, and lease terms have been offered by Manfried Leasing, with a payment of $74,400 per year. Barney & Stone could obtain a new loan for the assets, at 6.25 percent, and has sufficient tax loss carryovers to offset any potential taxable income the firm might have for the next five years. What is the net advantage to leasing?

Reference no: EM132910350

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