FCF 9th edition Chapter 27

# FCF 9th edition Chapter 27 - Chapter 27 Problems 1-12 Input...

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Chapter 27 Problems 1-12 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 Add-in" be installed in Excel. To install these, click on "Tools|Add-Ins" and select "Analysis ToolPak" and "Solver Add-In."

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Chapter 27 Question 1-5 Input Area: Cost \$5,800,000 Life of machine 4 Lease price \$1,740,000 Borrowing rate 8% Tax rate 35% Output Area: 1) Depreciation tax shield \$507,500 Aftertax cost of debt 5.20% Aftertax lease payment \$1,131,000 Total cash flow \$1,638,500 NAL \$16,851.25 You should lease. 2) NAL \$(16,851.25) 3) Breakeven lease payment \$1,747,345.15 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. NAL \$36,899.30 5) From #3, the lessor breaks even with a payment of \$1,747,345.15 Lessee breakeven \$1,751,140.67
Chapter 27 Question 6 Input Area: Cost \$5,800,000 Life of machine 4 Lease price \$1,740,000 Borrowing rate 8% Tax rate 35% MACRS schedule 0.3333 0.4445 0.1481 0.0741

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## This note was uploaded on 02/09/2012 for the course BMGT 340 taught by Professor None during the Spring '11 term at Shoreline.

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FCF 9th edition Chapter 27 - Chapter 27 Problems 1-12 Input...

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