You are considering whether to rent or buy a new piece of equipment expected to last six years. You can take out a bank loan at 8% yearly interest and buy the equipment for $45,000, or, you can lease it for $8,500 per year for the six years. If you buy, it will go into the Cl.8 asset pool with a 20% CCA rate. Your tax rate is 30%. Should you rent or lease? Assume the equipment will have no value at the end of the 6 years.

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The Answer of You are considering whether to rent or buy a new piece of equipment expected to last six years. You can take out a bank loan at 8% yearly interest and buy the equipment for $45,000, or, you can lease it for $8,500 per year for the six years. If you buy, it will go into the Cl.8 asset pool with a 20% CCA rate. Your tax rate is 30%. Should you rent or lease? Assume the equipment will have no value at the end of the 6 years.

You Are Considering Whether to Rent or Buy a New