Assume you have leased
equipment having a purchase price of $19,500.00 for
36 months, monthly rental payment at 8.5% is $616.00 and
your combined federal-state tax rate is 28%:
Enter amount of payment
Note the $2,069.76 is ANNUAL tax savings. For this example the TOTAL savings is $6,209.28 (3 years x $2,069.76)
The 3 year tax savings of
$6,209.28 is more than the $2,676.00 interest paid. Even
adding a 10% purchase option of $1,950.00, the final tax
savings of $1,583.28 is substantially greater than the total
finance charge. Result: $1,583.28
negative interest.
Calculated like this:
(3 year tax savings $6,209.28 less
interest paid $2,676.00 less purchase option price $1,950.00
= $1,583.28).
In the meantime your company's cash is working harder. The bottom line is stronger. Bank and other credit sources remain intact for those rainy-day situations that have a nasty habit of cropping up when least expected. Leasing can be very effective when understood and put to best use.
