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a. Purchase price of new equipment is $400,000 b. Down payment of 10% of purchase price c. Trade-in credit of $50,000 for old equipment with

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a. Purchase price of new equipment is $400,000 b. Down payment of 10% of purchase price c. Trade-in credit of $50,000 for old equipment with a tax basis of $60,000 d. 8 year-loan for the remainder e. Depreciation expense on the new equipment in the first year will be $50,000 f. Total principal payments on the equipment loan in the first year of $20,000 g. Total interest payments on the equipment loan in the first year of $15,000 Inflows Outflows Operating Investing III TID Financing

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