Case: Airplane Leasing Analysis we need to determine the after tax and before tax leasing payment

Our work as financial analysts for RBC. Our company is considering buying an airplane and then lease it to Delta Air Lines. Our task is to determine the before tax leasing payment.

We may choose an airplane of our choice (767, 777, 787)

We need to assume 20-year depreciation period in our lease analysis using the depreciation table in the notes or straight-line depreciation method.

We need to make our assumptions about tax rate, required rate of return, insurance cost, maintenance and operating costs, and salvage value. (We need to use Google Search to help us with the airplane price, expenses, maintenance cost, insurance cost, and depreciation value.)

Our final report will be in a word document, not the excel file. We may copy and paste the excel file or take a photo shot and include it in the word file.

We want to include the following in our report:

1. Description of our airplane

2. Explanation of our assumption of the parameters such as tax rate, required rate of return,

3. Explanation of our calculation of after-tax leasing payment

4. Our final calculation of before tax break even leasing payment.

There is no requirement for the length of the report. We need to make sure our report is clear and to the point. In other words, there is no minimum requirement for number of pages or lengths for the report.

Note:

(1) We need to follow the notes on Break Even Rent Example for reference

(2) We need to refer to How to Find numbers for airplane leasing break even payment analysis.docx for help to collect the data