• Profit tax rate = 17.5%
• Depreciation = 10-year straight line depreciation down to a 20% residual value

Find the NPV of the sale and leaseback decision using excel template showing formulas.

Purchase Price: Actual purchase price of the engine at the time of engine delivery with full title transfer to the leasing company Lease Term 10 years from the date of delivery Monthly Lease Rental: 0.8% * the purchase price, payable monthly Deposit: 3 months' rental, payable upon acceptance of the lease proposal, and refundable upon lease expiry Maintenance Reserve Rates: Payable monthly Per Engine Flight Hour: US$100 per engine flight hour at 27K US$130 per engine flight hour at 33K Per Engine Flight Cycle: US$111 per engine flight cycle (assumed 10% stub life) Validity of Maintenance Reserve The Maintenance Reserves Rates per Flight Hour Rates: and Flight Cycle are fixed for the entire lease term and are not subject to any escalation. Return Condition 1 Certified serviceable and have at least 9,000 hours (at 27K) or 6,500 hours (at 33K) remaining until its next heavy maintenance Return Condition 2 Each life-limited part shall have at least 6,000 cycles remaining Purchase Price: Actual purchase price of the engine at the time of engine delivery with full title transfer to the leasing company Lease Term 10 years from the date of delivery Monthly Lease Rental: 0.8% * the purchase price, payable monthly Deposit: 3 months' rental, payable upon acceptance of the lease proposal, and refundable upon lease expiry Maintenance Reserve Rates: Payable monthly Per Engine Flight Hour: US$100 per engine flight hour at 27K US$130 per engine flight hour at 33K Per Engine Flight Cycle: US$111 per engine flight cycle (assumed 10% stub life) Validity of Maintenance Reserve The Maintenance Reserves Rates per Flight Hour Rates: and Flight Cycle are fixed for the entire lease term and are not subject to any escalation. Return Condition 1 Certified serviceable and have at least 9,000 hours (at 27K) or 6,500 hours (at 33K) remaining until its next heavy maintenance Return Condition 2 Each life-limited part shall have at least 6,000 cycles remaining