Leasing versus borrowing Jick and Jill company (JJC) has a tax rate of 30 per cent. it is looking at obtaining a new laser scanner that identifies potential melanomas. the cost is $50000 bu JJC can lease it for $3251 a month, with payments made in advance for the next tax year. alternatively, it can borrow at 8.24 per cent per year with payments of $4042  a month in arrears.

The lease has a residual of $10000 when the salvage value will be $12000. Because of the special nature of the equipment the commissioner of taxation will allow monthly depreciation of $3000. should JCC lease?

Answer rating: 100% (QA)

To determine whether JJC should lease or borrow the laser scanner we need to compare the aftertax co... View the full answer