Items 1 2 3 4 5

Dep. Tax shield 18,900 18,900 18,900 18,900 18,900

Int. tax benefit 12600 10616.64 8395.271 5907.341 3120.859

Rent 82,190 82190 82190 82190 82190

Rent tax benefit 24657 24657 24657 24657 24657
Salvage 0 0 0 0 35,000

user:
ADVANTAGE of leasing Leasing advanatge=Adjusted cash price
- Deprication tax shield- Interest tax
shield - PV of rental payment + PV of
rental tax benefit

1 2 3 4 5
Principal amount 350,000 294,907 233,202 164,093 86,691

Installment 97093 97093 97093 97093 97093

Interest 42000 35389 27984 19691 10403

Principal repayment 55093 61705 69109 77402 86691

 Cash purchase price 350,000
PV Discount rate Borrowing rate 0.12
64885.23 WACC WACC 0.14
30,006.86 WACC Tax rate 0.3
Salvage value 35,000
Rent 85,190
296276.56 Borrowing rate Maintenance exp 3,000
84649.48 WACC PVIFA 3.605
18177.90 WACC n 5
Loan installment 97093
25302.93 L
Adjusted cash price 331,822.10

Depreciation 63000
Items 1 2 3 4 5
Dep. Tax shield 18,900 18,900 18,900 18,900 18,900
Int. tax benefit 12600 11045.89 9305.292 7355.819 5172.41

Rent 82,190 82190 82190 82190 82190

Rent tax benefit 24657 24657 24657 24657 24657
Salvage 0 0 0 0 35,000

user:
ADVANTAGE of leasing Advantage of lease = Adjusted cash
price - Deprication tax shield- Interest
tax shield - PV of rental payment + PV of
rental tax benefit

Year 1 2 3 4 5
Principal amount 350,000 306,830 258,480 204,328 143,678

Installment 85170 85170 85170 85170 85170

Interest 42000 36820 31018 24519 17241

Principal repayment 43170 48350 54152 60650 67928

PV Discount rate Cash purchase price 350,000
64885.23 WACC Borrowing rate 0.12
32,874.52 WACC WACC 0.14
Tax rate 0.3
Salvage value 35,000
296276.56 Borrowing rate Rent 85,190
84649.48 WACC Maintenance exp 3,000
18177.90 WACC PVIFA 4.109

22435.27 L Loan installment 85170

Adjusted cash price 331,822.10