Las Cruces Printing

Buy Price
Lease Payment
Asset Life(years)
Tax life
Operating Cost
Salvage
Tax rate
Cost of debt
WACC

24,000
5,250
8
5
2,000
6,000
0.34
0.06
0.12

Cost of Leasing
Year
0
After tax lease payment
3465
PVIF
1
PV LEASE PAYMENTS
3465
Cost of Leasing
22807.95
Cost of Buying
Year
Purchase
Op. Cost
After tax
Depr
Depr tax savings
Net salvage
Net cash outflow
PVIF
PV
Cost of owning

0
24,000

24,000
1
24000
23722.97

Net advantage of Leasing (NAL)

1
3465
0.94
3268.87

2
3465
0.89
3083.84

3
3465
0.84
2909.28

4
3465
0.79
2744.6

5
3465
0.75
2589.25

6
3465
0.7
2442.69

7
3465
0.67
2304.42

2,000
1320
4800
1632

2,000
1320
4800
1632

2,000
1320
4800
1632

2,000
1320
4800
1632

2,000
1320
4800
1632

2,000
1320

-312
0.94
-294.34

915.02

-312
0.89
-277.68

-312
0.84
-261.96

-312
0.79
-247.13

-312
0.75
-233.14

1320
0.7
930.55

8
0.63

0.4

2,000
1320

2,000
1320

1320
0.67
877.88

1320
0.63
828.18

3960
-3960
0.4
-1599.38