SAMPLE Lease Plan

 

Capital Cost:                $25,000.00

Term:                           36 Months

Corporate Tax Rate:    24%

Depreciation Rate:       15% First Year

30% Remaining Years (declining balance)

 

LEASING                                $                              BANK FINANCING                $                              CASH PURCHASE               $

 

Rate Factor per 1000          32.81                      Finance Cost @ 8%            $ 28,202.00          Cash Purchase:                  $25,000.00

Monthly Payment:                                                                               

$25,000. X .3281                 820.00                   Total Cost of Bank Financing                                                                          

 

Tax Expenses:                                                    Tax Expenses:

Depreciation Yr 1:                $ 3,750.00            

Cost: 36 X $820.00             $ 29,520                 Depreciation Yr 2:                $ 6,375.00             Depreciation Yr 1:                $ 3,750.00

Buyout: 5% of $25,000       $ 1,250.00             Depreciation Yr 3:                $ 4,462.00             Depreciation Yr 2:                $ 6,375.00

                Interest Expense                  $ 3,202.00             Depreciation Yr 3:                $ 4,462.00

Total cost of Leasing:         $ 30,770.00          Total Tax Expenses:           $ 17,789.00          Total Tax Expenses:           $14,587.00

                                                                                                                                                               

Tax Savings:                                                        Tax Savings:                                                        Tax Savings:

24% X $30,770.00               $ 7,384.80             24% X $17,789.00               $ 4,269.36             24% X $14,587.00               $ 3,500.00

 

Loss of Interest:

                                                                                                                                                                @5% / Yr:                              $ 3940.00

                                                                                                                                                                After Tax Loss of Interest: $ 2,994.40

 

Net Cost of Leasing:       $ 23,385.20       Net Cost Bank Finance  $ 23,932.64       Net Cost Purchase:        $24,494.40

 

LEASING is THE BEST ALTERNATIVE!

 

If Your Tax Rate is Greater Than 24%, Your Savings are Greater.