fm3_chapter07 - A 1 2 3 4 5 6 7 8 9 10 11 12 Cost of asset...

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BASIC LEVERAGED LEASE EXAMPLE Cost of asset 1,000,000 Lease term 15 Residual value 300,000 <-- Realized year 16 Equity 200,000 Debt 800,000 <-- 15-year term loan, equal payments of interest and principal Interest 10% Annual debt payment 105,179 #MACRO? Annual rent received 110,000 Tax rate 40% Year Depreciation Interest 0 -200,000 -200,000 1 110,000 142,800 800,000 105,179 80,000 25,179 49,941 #MACRO? 2 110,000 244,900 774,821 105,179 77,482 27,697 89,774 3 110,000 174,900 747,124 105,179 74,712 30,467 60,666 4 110,000 125,000 716,657 105,179 71,666 33,513 39,487 5 110,000 89,200 683,144 105,179 68,314 36,865 23,827 6 110,000 89,200 646,280 105,179 64,628 40,551 22,352 7 110,000 89,200 605,728 105,179 60,573 44,606 20,730 8 110,000 44,800 561,122 105,179 56,112 49,067 1,186 9 110,000 512,056 105,179 51,206 53,973 -18,697 10 110,000 458,082 105,179 45,808 59,371 -20,856 11 110,000 398,711 105,179 39,871 65,308 -23,231 12 110,000 333,403 105,179 33,340 71,839 -25,843 13 110,000 261,565 105,179 26,156 79,023 -28,716 14 110,000 182,542 105,179 18,254 86,925 -31,877 15 110,000 95,617 105,179 9,562 95,617 -35,354 16 300,000 180,000 IRR of cash flows 12.46% #MACRO? Data table: NPV of leveraged lease cash flows 103,389 #MACRO? 0% 103,389 1% 88,796 2% 76,064 3% 64,865 4% 54,936 5% 46,062 6% 38,068 7% 30,810 8% 24,173 9% 18,062 10% 12,397 12% 2,164 14% -6,916 16% -15,108 18% -22,596 20% -29,509 22% -35,940 Equity Invested Rental or salvage Principal at start of year Loan payment Repayment of principal Cash flow to equity A B C D E F G H I J 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51
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0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 -200,000 -180,000 -160,000 -140,000 -120,000 -100,000 -80,000 -60,000 -40,000 -20,000 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 Cash flows from Leveraged Lease Year
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Debt 800,000 Debt term (years) Interest Year Total payment 1 80,000 25,179 105,179 #MACRO?
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This note was uploaded on 01/23/2011 for the course FGB 780 taught by Professor Edwardchang during the Spring '09 term at Missouri State University-Springfield.

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fm3_chapter07 - A 1 2 3 4 5 6 7 8 9 10 11 12 Cost of asset...

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