DuPage Company Is Interested in Leasing a Machine and Has

Essay

DuPage Company is interested in leasing a machine and has identified the following possible lease that it may acquire.
Prior to making this decision and without the lease information, DuPage Company has the following amounts:
●Assets: $5,500,000
●Liabilities: $4,500,000
●Income before lease expenses: $750,000
●Income tax rate 35%
Prepare an independent analysis for the lease that includes the assets and liabilities sections of the balance sheet and an income statement, as well as a comparison of debt-to-equity ratios and return on asset ratios. Assume equity is $1,000,000 before considering the leases and $958,829 when considering the leases. Briefly summarize the effect on the two ratios.