10.28 important - $20,000 $32,000 $19,000 Salvage Value NCF...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
FCF Discount Rate Capital Budgeting Chapters 12-14 Value of Ops Chapters 11 Value of Acquisitions Chapter 26 Leases and Bond Refnancing Chapters 18, 19 no graphs, no sensitivity analysis there will be problems that use the template from the previous problem Least payment Cost of Ownership
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Equip Expected Life 8 Expected Salvage Value 0 Mkt Value after 4 yrs 42500 Bk value after 4 yrs 42500 Annual Loan Payment 78868 Year 1 2 3 4 Beg Loal Bal 250000 196132 136878 71698 Int Pmt 25000 19612 13688 7170 53868 59254 65180 71698 196132 136878 71698 0
Background image of page 2
Depr Rate Depr Exp Year 0 1 2 3 Purchase Cost $(250,000) $250,000 After-Tax Int Payment $15,000 $11,768 $8,213 Principal Payment $(53,868) $(59,254) $(65,180) Maintenance Cost $(20,000) $20,000 $(20,000) Tax savings from maintenance cost $8,000 $8,000 $8,000 Tax savings from depr
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: $20,000 $32,000 $19,000 Salvage Value NCF from Ownership $- $(60,868) $(51,022) $(66,393) PV Cost of Ownership-$211,783.00 <---------- $(185,112) Cost of leasing Lease Payment $(70,000) $(70,000) $(70,000) $(70,000) $28,000 $28,000 $28,000 $28,000 $(42,000) $(42,000) $(42,000) $(42,000) $(210,000) Cost of Comparison PV Ownership Cost @ 6% <---------- $(185,112) PV of leasing @ 6% <---------- $(187,534) Net Advantage to Leasing <---------- $(2,423) 4 $4,302 1 $(71,698) $(20,000) $8,000 $12,000 $42,500 $(33,500) $(70,000) $28,000 $(42,000) 500 1000 1500 250 500 750 300 300 300-50 200 450 100 100 100-150 100 350 5 2.5 1.67 0.33 2 1.29-1.67 5 2.14...
View Full Document

This note was uploaded on 09/08/2010 for the course BUS 173A at San Jose State University .

Page1 / 6

10.28 important - $20,000 $32,000 $19,000 Salvage Value NCF...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online