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    Lease vs Buy

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    Assuming that Reynolds tax rate is 40 percent and the equipment's depreciation would be $100 per year. If the company leased the asset on a 2-year lease, the payment would be $110 at the beginning of each year. If Reynolds borrowed and bought, the bank would charge 10 percent interest on the loan. Should Reynolds lease or buy the equipment?

    Text answer:

    Cost of owning = -$127; cost of leasing = -$128

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    https://brainmass.com/business/leasing/lease-vs-buy-76598

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    Assuming that Reynolds tax rate is 40 percent and the equipment's depreciation would be $100 per year. If the company leased
    the asset on a 2-year lease, the payment would be $110 at the beginning of each year. If Reynolds borrowed and bought, the bank would
    charge 10 percent interest on the loan. Should Reynolds lease or buy the ...

    Solution Summary

    The solution compares the lease and buy options.

    $2.19