Use Figure 15-9 to describe potential differences between leasing a piece of equipment with a capital lease and purchasing the equipment using a bank loan.
In figure 15-9

Buying Leasing Capital Markets (e.g., commercial banks (e.g., stocks, bonds, or notes) (e.g., stocks, bonds, or notes) S (net proceeds from sale of S (net proceeds from sale of securities) Lease agreement (conveys use value) Lessor (retains salvage value) Buyer Lessee Lease payments S (purchase price of equipment) S (purchase price of equipment) Title I Use value 2 Salvage value Title 1 Use value 2 Salvage value Equipment Dealer