Slide 20:

NPV Leasing instead of Buying: NPV of (Leasing CFs – Buying CFs)

1 1
NPV =25,000−5,825
[ −
]
0.05 0.05(1+0.05)5 = -219.20
PVAF

Slide 21:
NPV Buying instead of Leasing: NPV of (Buying CFs – Leasing CFs)

1 1
NPV =−25,000+5,825
[ −
]
0.05 0.05(1+0.05)5 = 219.20

Slide 29: Break-even analysis for Tiger Leasing

1 1
NPV =0=−25,000+(0.66 x Lmin +1,700)
[−
0.05 0.05 (1+ 0.05)5 ]
 0.66 x Lmin + 1,700 = 5,774.37
 Lmin = $6,173.29

Slide 30: Break-even analysis for ClumZee Movers

1 1
NPV =0=25,000−(0.75 x Lmax +1,250)
[ −
0.05 0.05 (1+ 0.05)5 ]
 0.75 x Lmax + 1,250 = 5,774.37
 Lmax = $6,032.49