ASAP PLS

QUESTION 4 (30 Marks): Purchase Cost (8) Analyze the cost of renting, leasing, and purchasing an item of construction equipment under the conditions described. Evaluate total net after-tax cash flow and its present value. Initial Year 1 Year 2 Year 3 Year + Year 3 Final Tonal Payments Resale Tax at resale Tax savings - depreciation Tax savings -interest Investment credit Net Cost Present value of net cost Lease Cost (S) General assumptions Income tax rate 25% Tax saving rate 896 Purchase assumption Equipment cost for whole at once payment 165000 Salvage value after 5 years 90000 Yearly depreciation (year 1) 17% Yearly depreciation (year 2) 19% Yearly depreciation (year 3) 20% Yearly depreciation (year 4) 20% Yearly depreciation (years) 20% Investment credit (year 1) 10% of equipment cost Cost basis cost less half the investment credit Down payment for equipment 20% of equipment cost Loan interest (year 1) 12498 Loan interest (year 2) 8018 Loan interest (year 3) 2969 Monthly payment for purchasing (yearl to year 3) 4050 Lease assumption Term of lease (years) Initial payment S month in advance Lease payment (monthly) 2000 Rent assumption Rental period (years) 5 Rental rate (monthly) from year 1 2000 Mid-year present worth factors for i-%8: (year 1) 0.96297 Mid-year present worth factors for i-%8: (year 2) 0.89164 Mid-year present worth factors for i-%8: (year 3) 0.82559 Mid-year present worth factors for i - 98 (year 4) 0.76443 Mid-year present worth factors for i-%8: (years) 0.70781 Mid-year present worth factors for i-%8: final year) 0.6ROSS Initial Year Your 2 Years Your 4 Years Final Tonal Payments Tax savings-payments Netcost Present value of net cost Rental Cost (S) Initial Year Your 2 Year 3 Year 4 Years Final Toral Payments Tax savings - payments Netcost Present value of net cost QUESTION 4 (30 Marks): Purchase Cost (8) Analyze the cost of renting, leasing, and purchasing an item of construction equipment under the conditions described. Evaluate total net after-tax cash flow and its present value. Initial Year 1 Year 2 Year 3 Year + Year 3 Final Tonal Payments Resale Tax at resale Tax savings - depreciation Tax savings -interest Investment credit Net Cost Present value of net cost Lease Cost (S) General assumptions Income tax rate 25% Tax saving rate 896 Purchase assumption Equipment cost for whole at once payment 165000 Salvage value after 5 years 90000 Yearly depreciation (year 1) 17% Yearly depreciation (year 2) 19% Yearly depreciation (year 3) 20% Yearly depreciation (year 4) 20% Yearly depreciation (years) 20% Investment credit (year 1) 10% of equipment cost Cost basis cost less half the investment credit Down payment for equipment 20% of equipment cost Loan interest (year 1) 12498 Loan interest (year 2) 8018 Loan interest (year 3) 2969 Monthly payment for purchasing (yearl to year 3) 4050 Lease assumption Term of lease (years) Initial payment S month in advance Lease payment (monthly) 2000 Rent assumption Rental period (years) 5 Rental rate (monthly) from year 1 2000 Mid-year present worth factors for i-%8: (year 1) 0.96297 Mid-year present worth factors for i-%8: (year 2) 0.89164 Mid-year present worth factors for i-%8: (year 3) 0.82559 Mid-year present worth factors for i - 98 (year 4) 0.76443 Mid-year present worth factors for i-%8: (years) 0.70781 Mid-year present worth factors for i-%8: final year) 0.6ROSS Initial Year Your 2 Years Your 4 Years Final Tonal Payments Tax savings-payments Netcost Present value of net cost Rental Cost (S) Initial Year Your 2 Year 3 Year 4 Years Final Toral Payments Tax savings - payments Netcost Present value of net cost