This preview shows pages 1–4. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: Chapter 21 Odd Problems Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green NOTE: Some functions used in these spreadsheets may require that the "Analysis ToolPak" or "Solver Addin" be installed in Excel. To install these, click on "ToolsAddIns" and select "Analysis ToolPak and "Solver AddIn." k" Chapter 21 Question 15 Input Area: Cost $4,500,000 Life of machine 4 Lease price $1,350,000 Borrowing rate 8% Tax rate 35% Output Area: 1) Depreciation tax shield $393,750 Aftertax cost of debt 5.20% Aftertax lease payment $877,500 Total cash flow $1,271,250 NAL $13,074.25 You should lease. 2) NAL $(13,074.25) 3) Breakeven OCF $1,274,954.24 Aftertax lease payment $881,204.24 Breakeven lease payment $1,355,698.83 4) If the tax rate is zero, there is no depreciation tax shield foregone; the aftertax lease payment is the same as the pretax payment, and the aftertax cost of debt is the same as the pretax cost....
View Full
Document
 Fall '09
 Halstead

Click to edit the document details