coolmandrew
Feb 6, 2008, 02:57 PM
I am trying to calculate the NAL of a lease from the following information. I know the answer is $108,048 but can't get the right calculation to get to the answer.
equipment cost = $1.5 million
Can obtain a bank loan for 100% of the purchase price or the equipment can be leased.
Assume the following facts:
(1) The machinery falls into the MACRS 3-year class.
(2) Under either the lease or the purchase, Big Sky must pay for insurance,
property taxes, and maintenance.
(3) The firm's tax rate is 40%.
(4) The loan would have an interest rate of 15%.
(5) The lease terms call for $400,000 payments at the end of each of the next 4 years.
(6) Assume that Big Sky Mining has no use for the machine beyond the expiration of the
lease. The machine has an estimated residual value of $250,000 at the end of the
4th year.
Thanks for any help anyone can offer!!
equipment cost = $1.5 million
Can obtain a bank loan for 100% of the purchase price or the equipment can be leased.
Assume the following facts:
(1) The machinery falls into the MACRS 3-year class.
(2) Under either the lease or the purchase, Big Sky must pay for insurance,
property taxes, and maintenance.
(3) The firm's tax rate is 40%.
(4) The loan would have an interest rate of 15%.
(5) The lease terms call for $400,000 payments at the end of each of the next 4 years.
(6) Assume that Big Sky Mining has no use for the machine beyond the expiration of the
lease. The machine has an estimated residual value of $250,000 at the end of the
4th year.
Thanks for any help anyone can offer!!