Sutton Corporation, which has a zero tax rate due to tax loss carry-forwards, is considering a 5-year, $4,200,000 bank loan to finance service equipment. The loan has an interest rate of 10% and would be amortized over 5 years, with 5 end-of-year payments. Sutton can also lease the equipment for 5 end-of-year payments of $1,790,000 each. How much larger or smaller is the bank loan payment than the lease payment? Note: Subtract the loan payment from the lease payment.© BrainMass Inc. brainmass.com March 4, 2021, 11:10 pm ad1c9bdddf
I created a loan amortization schedule in excel for you and then compared the loan payment to the lease payment.