Chapter 05 - Page 102 Misleading analysis This is the...

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Page 102 Page 1 Misleading analysis: This is the analysis of the first section of the chapter Asset cost 540,000 these numbers are copied Interest rate 12% from the next spreadsheet Lease rental payment 130,000 Annual depreciation 90,000 Tax rate 38% NPV(leasing) $371,145 NPV(buying) $399,390
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UN-3B EQUIVALENT LOAN METHOD Principal Loan Of which After-tax Asset cost 540,000 at beginning payment, Repayment loan Interest rate 12% Year of year end of year Interest of principal repayment Lease rental payment 130,000 1 487,443 137,027 58,493 78,534 114,800 114,800 Annual depreciation 90,000 2 408,909 133,446 49,069 84,377 114,800 114,800 Tax rate 38% 3 324,532 129,599 38,944 90,655 114,800 114,800 4 233,877 125,465 28,065 97,400 114,800 114,800 Year 0 1 2 3 4 5 6 5 136,478 121,023 16,377 104,646 114,800 114,800 6 31,832 35,652 3,820 31,832 34,200 34,200 After-tax cash flows from leasing After-tax lease rental -80,600 -80,600 -80,600 -80,600 -80,600 -80,600 After-tax cash flows from buying the asset Asset cost -540,000 Depreciation tax shield 34,200 34,200 34,200 34,200 34,200 34,200 Net cash from buying -540,000
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This note was uploaded on 02/02/2012 for the course BUSINESS 201 taught by Professor Acknan during the Spring '11 term at MIT.

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Chapter 05 - Page 102 Misleading analysis This is the...

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