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  • Section C Q 3 Dink Co

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    Chandu Naval
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    The document compares the net present value of leasing versus purchasing equipment over 5 years. It provides the cash flows and discounted cash flows for both options. For leasing, the net present value is -$538,393, while for purchasing the net present value is -$597,391, making leasing the more favorable option based on net present value.

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    Section c q 3 Dink Co

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    The document compares the net present value of leasing versus purchasing equipment over 5 years. It provides the cash flows and discounted cash flows for both options. For leasing, the net present value is -$538,393, while for purchasing the net present value is -$597,391, making leasing the more favorable option based on net present value.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    9 views3 pages

    Section C Q 3 Dink Co

    Uploaded by

    Chandu Naval
    The document compares the net present value of leasing versus purchasing equipment over 5 years. It provides the cash flows and discounted cash flows for both options. For leasing, the net present value is -$538,393, while for purchasing the net present value is -$597,391, making leasing the more favorable option based on net present value.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as xlsx, pdf, or txt
    of 3

    years 0 1 2

    initial investment -750000


    residual value
    service cost -23000 -23000
    tad benefits 56250
    service cost tax benefits 6900
    net cash flow -750000 -23000 40150
    df 0.943218260705527 0.88966068732836
    -21694.0199962271 35719.8765962336
    npv ($597,390.63) 152609.366995661 -597390.633004339

    leasing cost -200000 -200000 -200000


    tax benefits 60000
    net cash flow -200000 -200000 -140000
    df 0.943218260705527 0.88966068732836
    npv ($538,393.35)
    -188643.652141105 -124552.49622597
    -538393.352238157
    3 4 5

    50000 working note


    -23000 -23000 tad -25% 1 2
    42187.5 31640.625 79921.875 187500 140625
    6900 6900 6900 56250 42187.5
    26087.5 65540.625 86821.875
    0.839144206119939 0.79149613857757 0.7465536111843
    21891.1744771539 51875.1516074605 64817.18431104

    -200000
    60000 60000 60000
    -140000 60000 60000
    0.839144206119939 0.79149613857757 0.7465536111843
    -507822.4413
    -117480.188856792 47489.7683146542 44793.216671057
    3 4
    105468.8 266406.3
    31640.63 79921.88

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