Question
Question: I need help with the formula below. I cannot figure out how to calculate in excel? Can you attach an example of an excel
Question: I need help with the formula below. I cannot figure out how to calculate in excel? Can you attach an example of an excel spreadsheet for the formula?
Cost of Purchase:
$412,400+ $352,100*(P/A, 10%, 5) + $84,400*(P/A, 10%, 12) - $504,200*(P/F, 10%, 12) => $412,400 + ($352,100*3.791) + ($84,400*6.814) ($504,200*0.3186) = ?
Cost of Lease: Since the first payment is made at the beginning of the period, below formula need to be used to calculate present value of all payments.
Formula: Pmt x ((1-((1+r)-n )) / r) x (1+r) Payment per period (PMT) = $266,670 Discount Rate per period= 10% Number of periods (n) = 12
=> $266,670 x ((1-((1+0.10)-12 )) / 0.10) x (1+0.10) = ?
Net cost of lease = $100,000 + ? [$100,000/(1.10)12] = ?
So, Dunn Inc. should go for leasing option as its cost is lesser than purchase.
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