Case Study - Alliance Leasing

CASE SUMMARY

A construction firm had never utilized leasing before, but was interested to see if Alliance could provide financial and accounting benefits that would help them.

With the help of a leasing expert, a truck was located to fit their needs and, as a result of Alliance’s buying power, a price was negotiated that represented a $3,067.95 discount from their price based on a recent purchase.

$4,956

The company achieved a $4,956.19 savings by leasing vs. paying cash for this truck.

Additionally, the company was able to acquire the needed asset without using their own cash and without tying up their line of credit

Alliance Leasing ran a customized cash-flow analysis with the following parameters:

The company had a combined Federal and State income tax rate of 25% under the new tax laws
Their cost of capital was 5%
They earn approximately 7% pre-tax on the cash invested in its operations
They pay 7.6% sales tax on purchases
The company takes advantage of the IRS Section 179 Deduction