Sunrise Foods Inc. has decided to add a fifth warehouse distribution centre, partly to take advantage of

Question:

Sunrise Foods Inc. has decided to add a fifth warehouse centre, partly to take advantage of a new government incentive that has increased the CCA rate for such buildings to 10%. The cost is estimated to be $3 million, with annual payments (whether leasing or buying) of $394,421.33. The building will either be leased or be purchased outright with a loan. In either case, payments will start at the end of the year. The building has an economic life of 15 years. The appropriate is 10% and the tax rate is 45%.
Required:
Determine whether Sunrise should lease the building or buy it. Ignore remaining UCC at the end of 15 years. Show all relevant calculations.
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