# THE Alliance LEASE PROGRAM

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4 BUY OR LEASE - A COMPARISON ASSUMPTIONS: Capital Cost: \$12, Term: 36 Months Corporate Tax Rate: 24% Depreciation Rate: 15% First Year 30% Remaining Years (declining balance) LEASING BANK FINANCING CASH PURCHASE Rate Factor = Monthly Payment: Monthly Monthly Payment: \$12,000. x = \$ % Interest Cost: \$ \$0.00 Cost: 36x\$ = Total Cost of Bank Total Cost of Purchase \$14, Financing: \$13, (not including tax): \$12, Buyout: 5% of \$12,000.= \$ Depreciation Yr 1: \$1, Depreciation Yr 1: \$1, Total Cost of Leasing: \$14, Depreciation Yr 2: \$3, Depreciation Yr 2: \$3, Depreciation Yr 3: \$2, Depreciation Yr 3: \$2, Interest Expense: \$1, Interest Expense: \$0.00 Total write-off : \$14, Total write-off : \$8, Total write-off : \$7, Tax Savings: 24%x\$14, \$3, Tax Savings: 24%x\$8, \$2, Tax Savings: 24%x\$7, \$1, Loss of Interest (after tax) on \$12,000. \$2, Net Cost of Leasing: \$11, Net Cost of Bank Financing: \$11, Net Cost of Cash Purchase: \$12, LEASING: THE BEST ALTERNATIVE! If Your Tax Rate is Greater Than 24%, Your Savings are Greater E. & O.E. Please Consult with Your Accountant

6 HOW TO CALCULATE LEASE PAYMENTS To calculate lease payments you need to know three things: 1. Cost of the Equipment before taxes 2. Term of the Lease 3. Lease Rate Factor for that cost and term Then, simply multiply the cost by the appropriate Rate Factor. The result is the monthly payment. Taxes (GST/PST or HST) Example: Equipment cost = \$22,000. (net cost - never include any taxes) Term of the Lease = 36 months Customer in business for more than two years Go to the appropriate Rate Sheet Find the Term. (ex. 36 months) Find the "Factor" for that term and equipment cost Multiply the Equipment Cost x the Factor Sample Calculation: (If Rate Factor was ".03425") \$22, x = \$ THIS IS THE MONTHLY PAYMENT Remember, appropriate taxes are added to this payment monthly.

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