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Calculate the NPV of an investment, considering a capital lease with following conditions: Annual lease payments of $260,000 from year 1 to year 5 Effective
Calculate the NPV of an investment, considering a capital lease with following conditions: Annual lease payments of $260,000 from year 1 to year 5 Effective annual interest rate of 6% for the borrowed money Asset would yield the annual revenue of $350,000 for five years (from year 1 to year 5) Asset would have operating cost of $60,000 for year 1 to 5 The asset can be depreciated based on MACRS 5-year life depreciation with the half year convention (table A-1 at IRS )Over six years (from year 0 to year 5) Salvage value of $500,000 at the end of the 5th year Income tax 40% Minimum ROR of 10% Please calculate and include the lease principle and interest calculations. Table A-1 3-, 5-, 7-, 10-, 15-, and 20-Year Property Half-Year Conventi on Depreciation rate for recovery period Year 3-year 10-year 20-year 5-year 15-year 7-year 10.00% 18.00 33.33% 44.45 20.00% 32.00 14.29% 24.49 17.49 5.00% 9.50 8.55 3.750% 7.219 2 3 19.20 14.81 14.40 6,677 11.52 9.22 7.41 11.52 11.52 12.49 8.93 7.70 6.177 5.713 4 6.93 5 8.92 8.93 7.37 6.55 6.55 6.56 6.23 5.285 6 5.76 5.90 4.888 4.46 5.90 5.91 4.522 4.462 9 10 6.55 5.90 4.461 3.28 5.91 5.90 5.91 4.462 4.461 4.462 11 12 13 14 5.90 4.461 4.462 5.91 15 16 2.95 4.461 4.462 4.461 4.462 17 18 19 20 4.461 2.231 21
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