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What is the net advantage to leasing

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Question - DogChew Products needs to replace its rawhide tanning and molding equipment. It can be used for five years and will have no salvage value. The equipment costs $930,000. The firm can lease it for $245,000 a year, or it can borrow the money to purchase the equipment at 9%. The firm's tax rate is 39%. The CCA rate is 20% (Class 8). Using straight-line depreciation to a salvage value of zero, what is the net advantage to leasing?

Reference no: EM132919839

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