[Company Name]

Operating Lease vs. Own Analysis

[Date]

Model key
Bold numbers in white cells are entered by user.
Italicized numbers in gray cells are calculations that should not be altered.
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General analysis information

Decision date 1/15/2006

Tax information
Assumed federal tax rate 35.00%
Assumed state or local tax rate 5.00%
Combined tax rate 38.25%
Number of depreciable years (straight-line method) 5

Purchase information
Purchase price $100,000
Purchase with cash or financing? Cash
Monthly payment if financed N/A
Estimated annual financing rate 4.50%
Monthly borrowing rate 0.38%
Number of loan months 60
Projected salvage value percentage 10.00%
Estimated asset disposition costs $2,000
Discount rate (WACC) 11.00%
.
Leasing information
Monthly lease payment $1,500
Annual lease payments $18,000
[Company Name]
Operating Lease vs. Own Analysis
[Date]

Asset lifetime cost comparison

Option #1 -- Purchase (own) Option #2 -- Operating lease expense
Purchase price $100,000 Lease payments $90,000
Less depreciation tax benefit 38,250 Less depreciation tax benefit 0
Subtotal 61,750 Subtotal 90,000
Less salvage value 10,000 Less salvage value 0
Subtotal 51,750 Subtotal 90,000
Less interest tax benefit (if financed) 0 Less interest tax benefit N/A
Subtotal 51,750 Subtotal 90,000
Add asset disposition cost 2,000 Add asset disposition cost 2,000
Total net costs $53,750 Total net costs $92,000
Discount rate (WACC) 11% Discount rate (WACC) 11%
Present value of payments $100,000.00 Present value of lease payments 66,526.15
Present value of salvage less disposal cost ($4,747.61) Present value of disposal costs 1,186.90
Present value of depreciation tax savings ($28,273.61) Net present value of lease 67,713.05
Present value of interest tax savings $0.00
Present value of purchase costs $66,978.78

Lease or buy? Lease

[Company Name]
Operating Lease vs. Own Analysis
Loan Calculator

Monthly payment ($1,864.30)

Month Principal balance Principal payment Interest Payment

1 $100,000 ($1,489) ($375) ($1,864)
2 98,511 (1,495) (369) (1,864)
3 97,016 (1,500) (364) (1,864)
4 95,515 (1,506) (358) (1,864)
5 94,009 (1,512) (353) (1,864)
6 92,497 (1,517) (347) (1,864)
7 90,980 (1,523) (341) (1,864)
8 89,457 (1,529) (335) (1,864)
9 87,928 (1,535) (330) (1,864)
10 86,393 (1,540) (324) (1,864)
11 84,853 (1,546) (318) (1,864)
12 83,307 (1,552) (312) (1,864)
13 81,755 (1,558) (307) (1,864)
14 80,197 (1,564) (301) (1,864)
15 78,634 (1,569) (295) (1,864)
16 77,064 (1,575) (289) (1,864)
17 75,489 (1,581) (283) (1,864)
18 73,908 (1,587) (277) (1,864)
19 72,321 (1,593) (271) (1,864)
20 70,728 (1,599) (265) (1,864)
21 69,129 (1,605) (259) (1,864)
22 67,524 (1,611) (253) (1,864)
23 65,912 (1,617) (247) (1,864)
24 64,295 (1,623) (241) (1,864)
25 62,672 (1,629) (235) (1,864)
26 61,043 (1,635) (229) (1,864)
27 59,407 (1,642) (223) (1,864)
28 57,766 (1,648) (217) (1,864)
29 56,118 (1,654) (210) (1,864)
30 54,464 (1,660) (204) (1,864)
31 52,804 (1,666) (198) (1,864)
32 51,138 (1,673) (192) (1,864)
33 49,465 (1,679) (185) (1,864)
34 47,787 (1,685) (179) (1,864)
35 46,102 (1,691) (173) (1,864)
36 44,410 (1,698) (167) (1,864)
37 42,712 (1,704) (160) (1,864)
38 41,008 (1,711) (154) (1,864)
39 39,298 (1,717) (147) (1,864)
40 37,581 (1,723) (141) (1,864)
41 35,857 (1,730) (134) (1,864)
42 34,128 (1,736) (128) (1,864)
43 32,391 (1,743) (121) (1,864)
44 30,648 (1,749) (115) (1,864)
45 28,899 (1,756) (108) (1,864)
46 27,143 (1,763) (102) (1,864)
47 25,381 (1,769) (95) (1,864)
48 23,611 (1,776) (89) (1,864)
49 21,836 (1,782) (82) (1,864)
50 20,053 (1,789) (75) (1,864)
51 18,264 (1,796) (68) (1,864)
52 16,468 (1,803) (62) (1,864)
53 14,666 (1,809) (55) (1,864)
54 12,857 (1,816) (48) (1,864)
55 11,040 (1,823) (41) (1,864)
56 9,218 (1,830) (35) (1,864)
57 7,388 (1,837) (28) (1,864)
58 5,551 (1,843) (21) (1,864)
59 3,708 (1,850) (14) (1,864)
60 1,857 (1,857) (7) (1,864)