Question
(1) Assume that the lease payments were actually $280,000 per year, that Consolidated Leasing is also in the 40 percent tax bracket, and that it
(1) Assume that the lease payments were actually $280,000 per year, that Consolidated Leasing is also in the 40 percent tax bracket, and that it also forecasts a $200,000 residual value. Also, to furnish the maintenance support, Consolidated would have to purchase a maintenance contract from the manufacturer at the same $20,000 annual cost, again paid in advance. Consolidated Leasing can obtain an expected 10 percent pre-tax return on investments of similar risk. What would Consolidated's NPV and IRR of leasing be under these conditions?
| Year = | 0 | 1 | 2 | 3 | 4 | |
| Present Value of Owning | ||||||
| Equipment cost | ||||||
| Depreciation shield | ||||||
| Maintenance | ||||||
| Tax savings on maintenance | ||||||
| Lease payment | ||||||
| Tax on lease payment | ||||||
| Residual value | ||||||
| Tax on residual value | ||||||
| Net cash flow | ||||||
| PV @ 6% | ||||||
| IRR | ||||||
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The Fibonacci Effect How To Trade Using Fibonacci Elliot Wave And Zig Zag Projections
Authors: Mr. Lan H Turner
1st Edition
1481899511, 978-1481899512
