Ferrari Odyssey: Unleashing Financial Thrills

Embark on the financial journey of a lifetime as we navigate the exotic terrain of Ferrari

investments. Buckle up for three exhilarating scenarios that will put your financial acumen to the

test.

Case $1$: The Pure Adrenaline of $100\%$ Equity Capital

In the heart of Italy, a pristine Ferrari awaits, priced at $$120,000.$ With shipping and make$-$ready

costs of $$3,000$ and $$5,000$ respectively, Ferrari sets the stage for an unparalleled experience.

With $6$ units $($Ferrari $N=6),$ a tax rate of $21\%,$ and a Minimum Acceptable Rate of Return

$($MARR$)$ at $18\%$ per year, the $3-$Year MACRS GDS property promises a thrill ride.

Operating expenses kick off at a base amount in year $1,$ escalating to $$15,000$ with a delta $\%$

growth of $+5\frac{\%}{y}.$ The projected income in year $1$ revs up to $$50,000,$ accelerating at a $7\mathrm{.}5\%$

annual growth rate through year $6.$

The quest begins with $100\%$ equity capital funding $-$ no loans, just pure financial horsepower.

What awaits at the end of the road is the $18\%$ Net Present Value $($NPV$)$ of this

adrenaline$-$charged equity funding option.

SOLVE THAT$^^^$

Case $2$: Riding the Loan Waves

For those seeking a hybrid approach, we introduce a scenario where $50\%$ of the Ferrari dream

roars, the loan payments are equalized, and all other parameters remain as in Case $1.$

The question on everyone's mind: What is the $18\%$ NPV for this $50\%$ loan$-$funded escapade?

Will the financial gears align for a victorious ride?

SOLVE THAT$^^^$

Case $3$: Leasing the Enzo Asset

In a daring twist, Ferrari contemplates a route without additional debt. Instead, they opt for an

equity strategy, leaving room for the Enzo asset to be leased. Assume the baseline inputs mirror

the $100\%$ equity arrangement from Case $1.$

What lease amount, at the beginning of each period, will synchronize the NPV of the lease with

the NPV of the $100\%$ equity option? Get ready for a financial ballet as we dance with the

numbers to find the perfect harmony.

Rev up your calculators, and financial aficionados, and let the Ferrari Odyssey begin! May your

NPVs be positive, and your financial engines roar with success.

SOLVE THAT$^^^$