I have a question on my homework assignment I did it in word but do not know how to put the formulas into excel so it looks like I did it in excel. I need help with this and I would appreciate help. I figured it out but it did not work the way it needs to be I did all the calculuations can you see if its right

thanks

1) Craxton Engineering will either purchase or lease a new $756,000 fabricator. If purchased, the fabricator will be depreciated on a straight-line basis over 7 years. Craxton can lease the fabricator for $130,000 per year for 7 years. Craxton's tax rate is 35%. (Assume the fabricator has no residual value at the end of the 7 years.) a. What are the free cash flow consequences of buying the fabricator if the lease is a true tax lease? Answer: FCF0= Capital Expenditure = $756,000 FCF1-7= Depreciation tax shield = 35% 756,000/7 = $37,800 b. What are the free cash flow consequences of leasing the fabricator if the lease is a true tax lease? Answer: FCF0-6= After-tax lease payment = 130,000 (1 - 35%) = $84,500 c. What are the incremental free cash flows of leasing versus buying?\\ Answer: FCF0= -84,500 - (-756,000) = $671,500 FCF1-6= -84,500 - (37,800) = $122,300 FCF7= 0 - (37,800) = $37,800 2) Riverton Mining plans to purchase or lease $220,000 worth of excavation equipment. If purchased, the equipment will be depreciated on a straight-line basis over 5 years, after which it will be worthless. If leased, the annual lease payments will be $55,000 per year for 5 years. Assume Riverton's borrowing cost is 8%, its tax rate is 35%, and the lease qualifies as a true tax lease. a. If Riverton purchases the equipment, what is the amount of the lease-equivalent loan? Answer: If Riverton purchases the equipment it will incur depreciation of $44,000 each year ($220,000/5) which would result in a tax shield of $15,400 ($44,000*35%) per year for five years. If Riverton leases, its lease payment would be $35,750 net of taxes[$55,000*(1 - 0.35)]. The free cash flows (FCF) of leasing compared to buying is as follows: Year Leasing Buying FCF 0 1 2 3 4 5 (35,750) (35,750) (35,750) (35,750) (35,750) (220,000) 184,250 15,400 15,400 15,400 15,400 15,400 (51,150) (51,150) (51,150) (51,150) (15,400) Riverton's after-tax cost of debt is 5.2% [8%*(1 - 0.35)]. The amount of the lease equivalent loas is the present value of the FCF in years 1-5 discounted at the cost of debt of 5.2%. b. Is Riverton better off leasing the equipment or financing the purchase using the lease equivalent loan? Answer: If Riverton leases, it pays $35,750 after-tax as an initial lease payment. If it buys using the lease equivalent loan, it pays 220,000 - 192,488 = $27,512 immediately. Buying with the lease equivalent loan is cheaper by 35,750 - 27,512 = $8,238, since the future payments are the same anyway. Therefore Riverton is better off financing the purchase using the lease equivalent loan. c. What is the effective after-tax lease borrowing rate? How does this compare to Riverton's actual after-tax borrowing rate? Answer: The effective after-tax lease borrowing rate is the internal rate of return (IRR) of the incremental FCF calculated in (a). Using Excel, the IRR is 7.0%, which is higher than Riverton's actual after-tax cost of debt of 5.2% [8% (1 - 0.35)]. Thus, the lease is not attractive