1. The document contains financial calculations for evaluating the costs and benefits of leasing versus purchasing equipment. It analyzes scenarios such as leasing a scanner for $1.275 million over 4 years versus purchasing it for $4.3 million.
2. It also considers leasing options for other large capital equipment, providing calculations for multi-year lease payments, tax deductions, salvage values, and the net present value of leasing versus purchasing.
3. The analyses determine the break-even lease payment amounts and whether leasing or purchasing would have a more favorable net after-tax cash flow over the lifetime of the equipment.
1. The document contains financial calculations for evaluating the costs and benefits of leasing versus purchasing equipment. It analyzes scenarios such as leasing a scanner for $1.275 million over 4 years versus purchasing it for $4.3 million.
2. It also considers leasing options for other large capital equipment, providing calculations for multi-year lease payments, tax deductions, salvage values, and the net present value of leasing versus purchasing.
3. The analyses determine the break-even lease payment amounts and whether leasing or purchasing would have a more favorable net after-tax cash flow over the lifetime of the equipment.
1. The document contains financial calculations for evaluating the costs and benefits of leasing versus purchasing equipment. It analyzes scenarios such as leasing a scanner for $1.275 million over 4 years versus purchasing it for $4.3 million.
2. It also considers leasing options for other large capital equipment, providing calculations for multi-year lease payments, tax deductions, salvage values, and the net present value of leasing versus purchasing.
3. The analyses determine the break-even lease payment amounts and whether leasing or purchasing would have a more favorable net after-tax cash flow over the lifetime of the equipment.
1. The document contains financial calculations for evaluating the costs and benefits of leasing versus purchasing equipment. It analyzes scenarios such as leasing a scanner for $1.275 million over 4 years versus purchasing it for $4.3 million.
2. It also considers leasing options for other large capital equipment, providing calculations for multi-year lease payments, tax deductions, salvage values, and the net present value of leasing versus purchasing.
3. The analyses determine the break-even lease payment amounts and whether leasing or purchasing would have a more favorable net after-tax cash flow over the lifetime of the equipment.
Year:2 OCF $1,408,634 0.3333 Year:3 OCF $1,140,984 0.4445 Year:4 OCF $1,074,162 0.1481 0.0741 NAL $33,392.96 per year
before taxes Depreciation tax shield $403,880 Pretax cost savings $2,800,000 per year Aftertax lease payment $1,501,500 The system costs $8,780,000 Aftertax debt cost 5.39% NPER 5 NAL $272,240.49 $272,240.49 TaxRate 23% 1.For us this rate must b Borrow 7% 2.For us this rate must b NAL $0.00 Lease $1,950,000 per year X $1,561,809.44 Salvage Value $900,000 Pretax lease payment $2,028,323.95 Security deposit $600,000
NAL $0.00 X $1,408,461.45 Pretax lease payment $1,829,170.72
NAL $133,721.92 1.For us this rate must be much greater. 2.For us this rate must be much greater. Asset_Price $745,000 NPER 3 The lessor 6% Borrow The lessee 9% Borrow TaxRate 21%
Depreciation tax shield $52,150
Aftertax debt cost 7.11% NAL $0.00 PMT_Min_Lessor $294,055.95 NAL $0.00 PMT_Max_Lessee $294,315.79 Price car $49,500 Other costs $850 Down payment $5,000 Salvage value $28,500 after three years Money factor 2400 Lease factor 0.00185 NPER 36 Sales tax 7%
APR 4.44% Net capitalized cost $45,350 Depreciation charge $468.06 Finance charge $136.62 Taxes $42.33 Lease payment $647.01 per month The annual loan payment will be: $1,298,259.46 Purchase price $4,300,000 Loan 8% NPER 4 TaxRate 21% Beginning Interest Principal Year Total payment balance payment payment 1 $4,300,000.00 $1,298,259.46 $344,000.00 $954,259.46 2 $3,345,740.54 $1,298,259.46 $267,659.24 $1,030,600.22 3 $2,315,140.32 $1,298,259.46 $185,211.23 $1,113,048.23 4 $1,202,092.09 $1,298,259.46 $96,167.37 $1,202,092.09
NAL $58,646.08 Ending balance $3,345,740.54 $2,315,140.32 $1,202,092.09 $0 Price equipment $7,930,000 Salavage value $1,020,000 NPER 4 Lease $1,924,000 four annual payments due at the beginning of the year. Security deposit $520,000 YTM(Cost of debt) 11% TaxRate 21%
Aftertax salvage value $805,800
Year 0 Year 1 Year 2 Year 3 Year 4
Saved purchase $7,930,000 Lost salvage value ($805,800) Lost dep. tax shield ($555,044.49) ($740,225.85) ($246,630.93) ($123,398.73) Security deposit ($520,000) $520,000 Lease payment ($1,924,000) ($1,924,000) ($1,924,000) ($1,924,000) Tax on lease payment $404,040 $404,040 $404,040 $404,040 Cash flow from leasing $5,890,040 ($2,075,004.49) ($2,260,185.85) ($1,766,590.93) ($409,198.73)
Aftertax cost of debt 8.69%
NAL $398,670.47
Lease $2,307,500 NPER 2 Salavage value $4,200,000 Book value $1,762,046 Aftertax salvage value $3,688,029.66
Year 0 Year 1 Year 2
Saved purchase $7,930,000 Lost salvage value ($3,688,029.66) Lost dep. tax shield ($555,044.49) ($740,225.85) Lease payment ($2,307,500) ($2,307,500) Tax on lease payment $484,575 $484,575 Cash flow from leasing $6,107,075 ($2,377,969) ($4,428,256)
