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Sheet1

This spreadsheet analyzes the lease/purchase decision. In the case of a purchase, it is assumed
sales tax is paid on the negotiated price at the time of purchase, and property taxes are paid annually.
In the case of a lease, it is assumed sales tax is paid on the difference between the list price and the
payoff at the time of purchase, sales tax is paid on the payoff when the lease expires, and property taxes
are paid by the lessor. This spreadsheet assumes the item is purchased at the payoff price at the time
the lease expires. The lease has additional value to the lessee because of the option not to purchase.
The features of your lease may be different than assumed here.

Assumptions
List price
Negotiated price
Lease period (months)
Payoff
Interest rate (APR)
Effective annual rate
Sales tax rate
Property tax (annual)
Lease payment

$ 26,000
$ 24,000
36
$ 20,000
9.00%
9.38%
6%
$
300
$
280

Results

Present value of payments


Present value of sales tax
Present value of property tax
Total

Purchase

Lease

$ 24,000
$ 1,440
$
754
$ 26,194

$ 24,154
$ 1,277
$ 25,431

The following table provides a check on the lease calculations above.

Month
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17

Payment
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

280
280
280
280
280
280
280
280
280
280
280
280
280
280
280
280
280
280

Sales
Tax
360 $
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Total

PV
Factor

640
280
280
280
280
280
280
280
280
280
280
280
280
280
280
280
280
280

Page 1

100.0%
99.3%
98.5%
97.8%
97.1%
96.3%
95.6%
94.9%
94.2%
93.5%
92.8%
92.1%
91.4%
90.7%
90.1%
89.4%
88.7%
88.1%

PV

Cumul
PV

640.00
277.92
275.85
273.79
271.76
269.73
267.72
265.73
263.75
261.79
259.84
257.91
255.99
254.08
252.19
250.31
248.45
246.60

640.00
917.92
1193.76
1467.56
1739.31
2009.04
2276.77
2542.50
2806.25
3068.04
3327.88
3585.79
3841.78
4095.86
4348.05
4598.36
4846.81
5093.41

Sheet1

18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36

$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$ 20,000

$ 1,200

$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$
280
$ 21,200

Page 2

87.4%
244.76 5338.17
86.8%
242.94 5581.11
86.1%
241.13 5822.25
85.5%
239.34 6061.58
84.8%
237.56 6299.14
84.2%
235.79 6534.93
83.6%
234.03 6768.96
83.0%
232.29 7001.25
82.3%
230.56 7231.81
81.7%
228.85 7460.66
81.1%
227.14 7687.80
80.5%
225.45 7913.25
79.9%
223.77 8137.02
79.3%
222.11 8359.13
78.7%
220.45 8579.58
78.1%
218.81 8798.39
77.6%
217.18 9015.58
77.0%
215.57 9231.14
76.4% 16199.96 25431.10

Sheet1

property taxes

Page 3