please help and be clear for number 15-2 ONLY

lease vs buy

Problems Easy Answers to odd-numbered problems appear in Appendix A. Problems 1-2 15-1 Minetello Construction needs a piece of equipment that costs $40,000. Minetello either can ce Sheet Effects lease the equipment or borrow $40,000 from a local bank and buy the equipment. If the equipment is leased, the lease would not have to be capitalized. Minetello's balance sheet prior to the acquisition of the equipment is as follows: Current assets $15,000 Debt $20,000 Net fixed assets 65,000 Equity 60,000 Total assets $80,000 Total claims $80,000 a. (1) What is Minetello's debt ratio at present? (2) What would be the company's debt ratio if it purchased the equipment? (3) What would be the debt ratio if the equipment were leased? b. Would the company's financial risk be different under the leasing and purchasing alternatives? 15-2 Assume in Problem 15-1 that Minetello's tax rate is 40% and that the equipment's CCA versus Buy would be $20,000 per year. If the company leased the asset on a 2-year lease, the payment would be $22,000 at the beginning of each year. If Minetello borrowed and bought, the bank would charge 10% interest on the loan. In either case, the equipment is worth nothing after 2 years and will be discarded. Should Minetello lease or buy the equipment