Year 2 3 4 5 6 7 Buy option Down payment 5 000 - - Repairs 1 000 1 500 2 500 3 000 3 500 4 000 4 500 Loan payment 10 564 10 564 10 564 10 564 10 564 10 564 10 564 Tax reduction 3 912 3914 4 045 4 024 3.990 3 942 3 879 Salvage value - - - - 31 000 Lease option Up-front charges 3.000 3.000 3.000 Lease cost 7 500 7 500 7 500 7 500 7 500 7 500 7 500 Tax reduction 2 940 2 100 2380 2 940 2 100 2 380 2 940 Lease penalty - - 1 000 - - 1 000 -