I was given a capital budgeting case and have created an excel base on it. The case says if the company goes forward with this project, the production and assembly facility will be located in a building that will be leased for $700,000 annually and this lease payment will be tax-deductible made at the beginning of each year and does not change for the 7 years. It seems like this building will be leased specfically for this project. My question is if the lease payment is included in this cash flow, if so, how would it be implemented and what do I need to change in my excel.

1 Unit Sales 8,000 $6,000.00 2 Unit Price NPV $13,812,646.96 $2,800.00 3 Unit Variable Costs 22.76% 4 Fixed Costs $12,700,000 MIRR 17.87% 5 Cannibalization Costs $0 $34,400,000 Equipment Costs 7 Shipping Costs $0 8 Installation Costs $5,800,000 9 Investment in Inventory $34,400,000 10 Depreciable Expense 11 Equipment Salvage Value $7,500,000 12 Tax Rate 44% 13 Required Rate of Return 13% 14 Price Inflation 2.5% 15 Variable Costs Inflation 2.0% 16 17 18 Sales Revenue $49,200,000 $50,430,000 $51,690,750 $52,983,019 $54,307,594 $55,665,284 $57,056,916 19 Variable Costs $22,848,000 $23,304,960 $23,771,059 $24,246,480 $24,731,410 $25,226,038 $25,730,559 $12,700,000 $12,700,000 $12,700,000 $12,700,000 $12,700,000 $12,700,000 $12,700,000 20 Fixed Costs $0 $0 21 Cannibalization Costs $0 $0 $0 $0 $0 $6,880,000 $11,008,000 $6,604,800 $3,962,880 $3,962,880 $1,981,440 $0 22 Depreciation 23 Earnings Before tax $6,772,000 $3,417,040 $8,614,891 $12,073,658 $12,913,304 $15,757,806 S18,626,357 Taxes $2,979,680 $1,503,498 $3,790,552 $5,312,410 $5,68 1,854 $6,933,435 $8,195,597 24 $3,792,320 $1,913,542 $4,824,339 $6,761,249 $7,231,450 $8,824,371 $10,430,760 25 Earnings After Tax 26 Net Cash Flow $10,672,320 $12,921,542 $11,429,139 $10,724,129 $11,194,330 $10,805,811 $10,430,760 27 Salvage Value $7,500,000 $3,300,000 28 Tax on Salvage Value 29 Return off NWC $5,800,000 30 Terminal NO Cash Flow $10,000,000 31 Cash Flow ($40,200,000) $10,672,320 $12,921,542 $11,429,139 $10,724,129 $11,194,330 $10,805,811 $20,430,760 32