Chapter 06 - BASIC LEVERAGED LEASE EXAMPLE Cost of asset...

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Unformatted text preview: BASIC LEVERAGED LEASE EXAMPLE Cost of asset 1,000,000 Lease term 15 Residual value 300,000 Equity 200,000 Debt 800,000 15-year term loan, equal payments of interest and principal Interest 10% Annual debt payment 105,179 Annual rent received 110,000 Tax rate 40% Principal Repayment Equity Rental or at Start Loan of Cash Year invested Salvage Depreciation of Year Payment Interest Principal Flow-200,000-200,000 1 110,000 142,800 800,000 105,179 80,000 25,179 49,941 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% interest rate 6% NPV 38,068 38,068 103,389 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 11% 7,115 12% 2,164 13%-2,501 14%-6,916 15%-11,110 16%-15,108 103,389 103,389 5% 103,389 10% 103,389 15% 103,389 20%...
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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 06 - BASIC LEVERAGED LEASE EXAMPLE Cost of asset...

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