Introduction

For more information about this program, contact:

Duane Griffith (406) 994-2580
210 Linfield Hall griffith@montana.edu
Montana State University
Bozeman, Mt. 59717

Please read the cautions, assumptions and interpretations of results listed

below before you run this program. It is very important that you understand
how to use this program before interpreting results.

Cautions and Assumptions:

1) This program is designed so that you can compare many different
possible combinations of lease, purchasing and custom or
renting machinery to accomplish a particular task. However, you
must be careful that you are making relavent comparisons. The
mistake that this program will not account for is an incorrect
specification of the number of years for comparison purposes
when evaluating a lease with a buyout option to a purchase. The
number of years specified for analysis must be at least as long
as the combined lease term and finance term for the buyout.
Example: Lease for 5 years and finance for 5 years, term
must be at least 10 years long.

2) Year 0 in the analysis is counted as a full year for financial and

economic considerations. This means that a 10 year analysis
will end in year 9 listed on the results tables for Purchases,
Leases and Custom/Rental.

3) If indicated the lease analysis has no buy out option, the program assumes
the work must be done, hence consecutive leases of equal costs are executed
for the full fifteen year analysis. This allows for comparisons with buyout options.

4) If the buyout option is exercised, it occurs at the beginning of the year following
the last year in the lease. The basis for depreciation is the buyout value
and the buyout value is depreciated for class life of the piece of equipment
specified using the strait line method. Salvage value is calculated as

Page 1
 Introduction

a percent of the buyout amount, not purchase price. Full depreciation is taken
during the first year of the buyout.

5) Annual expenses should include all cash expense (not depreciation) incurred by the leasee.
Expenses before the buyout and after the buyout are sepreated to account for
leases which may cover some of the variable costs associated with equipment operation.

6) For rental analysis, include the annual cost of renting equipment and the
annual cash operating expenses incurred by the renter. The program assumes these
costs will inflate each year by the inflation factor specified in the input section.
The rental analysis uses the same discount factors (tax adjusted) as the lease
portion of this template.

7) The Rental Portion of this program can be used to compare getting the
work done by a "Custom Operator." You can simply fill in
the custom rate charged and leave the operating expense blank.
Remember to make fair comparisons. If you are looking at
purchasing a combine, you must use only the custom rate
for the combine when making a comparison, not the rate of cutting
and hauling.

8) The discount factor specified in the input section is adjusted by the marginal tax
rate specified. The assumption is that alterntive investments would generate a tax
impact and therefore the discount rate should be adjusted for these implications
from alternative investments.

9) The results of the purchase option can be heavily influenced by the

residual value calculated for the piece of equipment. Make sure that you
check the residual value calculated and that you are using the number
of years for the analysis that you actually plan to keep the piece of
equipment for the purchase option or the combination lease & buyout
option. If you are likely to keep a piece of equipment 15 years, use 15 years,
not a shorter period of time.

Interpretation of Results:

Page 2
 Introduction

10) The results of the program are presented in three tables. Each option
analyzed, 1) Purchase, 2) Lease, 3) Rental/Custom, has a table of
results calculated for that option. In each table, detail is presented
for the financial and economic implications of that option. Comparisons
of the different options is accomplished using one of two possible outputs
from this program. At the end of each of the three tables for each option are
two columns. The first is labeled " Cummulative Net Present Value."
The second is labeled "Annual Equivalent."

11) The Net Present Value is the total dollars spent (after taxes) in current
dollars. All future expenses and cash outflows are discounted back to
the present. This allows an apples to apples comparison of
different amounts of money being spent purchase vs lease vs rental etc.

12) The Annual Equivalent calculation is similar but can be used to compare
options that do not have the same time frame. An example, would be a lease
that you plan for 5 years with a purchase that will cover a 10 year period.

Comparing options with equal lengths of time.

13) If your analysis uses the same time period for each options, say 12 years
for the Purchase, Lease, and Rental/Custom, you can use the Cummulative
Net Present Value column. Follow it down to the year (year 11 -see
item number 2) above) to get the results for year 12. The option that
costs the least amount of money (in current dollars) is the one with
the lowest Net Present Value calculation.

Comparing options of Unequal length.

14) If your analysis uses differing time periods, you must use the Annual Equivalent
column to compare numbers for the options considered. The annual equivalent
converts the Net Present Value for the entire time period to an equivalent amount
of money (on an annual basis). Since the conversion is to annual, different
times periods can be compared. The selection criteria is again the option
with the lowest "Annual Equivalent."
Note: Some of your analysis may have more rows (years) than you wanted
to analyze. This will be true for a lease that has no buyout option specified.
If you wish to analyze a 5 year lease without a buyout at the end of the lease,

Page 3
 Introduction

you will note the entire lease table is filled. Simple go down row 4
(remember year 0 counts as a full year) and read accross to the end
of row 4 to get the Net Present Value and Annual Equivalent for a 5 year lease.

Page 4
This template analyzes three options for accomplishing a task with machinery. Purchase, Lease, and Rental.
REMAINING VALUE OF INVESTMENT
Items to be entered are outlined with a double lined box. And text is in Blue

General Information Used for Lease and Purchase as necessary Beginning Tractor Impl't Impl't Impl't
Item to Purchase Combine Year Group Group Group Group
Marginal Tax Rate 25.00% 1 2 3 4
Discount Rate 3.50% 1 100.0% 100.0% 100.0% 100.0%
Current market Value of Trade-in $ $0.00 This worksheet should only be used to calculate 2 62.5% 56.6% 53.1% 49.6%
Undepreciatied Value of Trade-in $ $0.00 Net Present Values for capital items which Do Not 3 57.5% 50.1% 47.0% 43.9%
Cost of Machine Sold or Traded $ $0.00 generate a stream of income. The best alternative is 4 52.8% 44.4% 41.6% 38.8%
Sell or Trade (1 or 2) 1 the one that has the smallest negative net present value. 5 48.7% 39.3% 36.8% 34.4%
Machinery Group Number (1-4) 1 26-Aug-17 6 44.8% 34.7% 32.6% 30.4%
Depreciation Class, 3, 5, or 7yr (3 , 5 or 7) 5 7 41.2% 30.7% 28.8% 26.9%
Capital Gains Tax Rate (% Gain Taxed) 0.00% 8 37.9% 27.2% 25.5% 23.8%
Annual Cash Operating Expenses $1,731,840.00 9 34.8% 24.1% 22.6% 21.1%
Expected Annual Inflation Rate 2.50% 10 32.1% 21.3% 20.0% 18.6%
PURCHASE INFORMATION 11 29.4% 18.9% 17.7% 16.5%
Purchase Price ($) $2,735,000.00 12 27.0% 16.7% 15.6% 14.6%
Amount to Finance ($) $0.00
Downpayment $2,735,000
Interest rate 10.00%
Years to Finance Yrs 5
Number of Years for Analysis Yrs 10 (lease, purchase and rental/custom) 1994 Depreciation for Machinery and Equipment
Calculated Payment (Annual Payments Assumed) $0 150% Declining Balance Method
Year 3-Year 5-Year 7-year
Amount Expensed ($) $0.00 0 3 5 7
Investment Credit Taken 0% 1 25.00% 15.00% 10.71%
Investment Credit Applicable $0 2 37.50% 25.50% 19.13%
Depreciable Basis $2,735,000 3 25.00% 17.85% 15.03%
Estimated salvage Value $807,876 4 12.50% 16.66% 12.25% ###
5 16.66% 12.25%
Tax Adjusted Discount Rate 2.63% 6 8.33% 12.25% $807,876
7 12.25%
8 6.13%
PURCHASE
Depreciation Tax Adjusted
Downpayment and Annual ITC Net Discount Cummulative The depreciation schedules shown above can be
Year and Interest First Year Cash Operating & Tax After Tax Factor Present Net Present Annual changed at any time to update this program to reflect
Principal Payment Expensing Expense Residual Credit Cash Outflow 2.6250% Value Value Equivalent changes in tax laws or depreciation methods. $0
0 2,735,000 410,250 1,731,840 -535,523 3,931,318 1.00000 3,931,318 3,931,318 If you change the table, you MUST leave the shaded
1 0 0 697,425 1,775,136 0 -618,140 1,156,996 0.97442 1,127,401 5,058,719 line with 0, 3, 5, and 7 indicating the class 0
2 0 0 488,198 1,819,514 0 -576,928 1,242,586 0.94950 1,179,832 6,238,551 2,226,752 life of depreciation or replace it with something similar. 0
3 0 0 455,651 1,865,002 0 -580,163 1,284,839 0.92521 1,188,746 7,427,298 2,022,090 If the years (class life) do not change, simply 0
4 0 0 455,651 1,911,627 0 -591,820 1,319,808 0.90154 1,189,866 8,617,163 1,908,541 enter the new depreciation rates under the 0
5 0 0 227,826 1,959,418 0 -546,811 1,412,607 0.87848 1,240,954 9,858,117 1,850,055 appropriate class life. 0
6 0 0 0 2,008,403 0 -502,101 1,506,303 0.85601 1,289,416 11,147,533 1,823,118 0
7 0 0 0 2,058,614 0 -514,653 1,543,960 0.83412 1,287,846 12,435,379 1,809,057 0
8 0 0 2,110,079 0 -527,520 1,582,559 0.81278 1,286,277 13,721,657 1,803,657 0
9 0 0 2,162,831 -807,876 -338,739 1,016,216 0.79199 804,837 14,526,493 1,746,685
10 0 0 0 0 0 0 0.77174 0 0 0
11 0 0 0 0 0 0 0.75200 0 0 0
12 0 0 0 0 0 0 0.73276 0 0 0
13 0 0 0 0 0 0 0.71402 0 0 0
14 0 0 0 0 0 0 0.69575 0 0 0
15 0 0 0 0 0 0 0.67796 0 0 0 $0
Total Depreciation Taken 2,735,000 Net Present Value (After Tax) -14,526,493

Lease:
Item for Lease Combine
Purchase or List Price of Lease Item $2,735,000.00
Lease Terms: Residual Value 15.00% Enter as a Decimal
Interest Rate 50.00% Enter as a Decimal
Term in Years 5 Whole Years Only
No Buyout = 1 Buyout = 2 2
Marginal Tax Rate 25.00% Enter as a Decimal
Discount Factor to be Used 3.50%
Annual Cash Expense Befor Buyout $333,240.00 Enter in Current Dollars
Annual Cash Expense After Buyout $1,921,840.00 Enter in Current Dollars
Salvage as a % of Buyout 0.00%
Expected Annual Inflation Rate 2.50%

Calculated Annual Lease Payment $ $1,338,659.36

Calculated Buyout Amount $410,250.00
Percent of Buyout Amount Financed 0.00%
Term of Loan in Years After Buyout 5
Calculated Depreciable Basis After Buyout $410,250.00
Net Present Value of the Lease ($13,443,751.65)
Tax Savings Present Present Present
Annual Annual Tax Adjusted Present Annual From Depr. Value of Present Value of Value of Inflated Inflated
Loan Cash Lease Tax Savings After Tax Discount Value of Cash Annual Annual Annual Annual Cash Tax Savings Value of Annual Principle Cumulative Inflation Before After
Analysis Repayment Outflows From Lease Lease Factor After Tax Operating Depreciation Principle Interest Operating & From Depr. Buyout Cash & Interest Net Present Annual Analysis Adjustment Buyout Buyout
Year Year and Buyout Payment Payment 2.6250% Lease Payment Outflows Expense Payments Payment Interest Oper. & Int. Amount Operating Payments Value Equivalent Year Factor CashFlow Cash_Flow
0 0 1,338,659 334,665 1,003,995 1.00000 1,003,995 333,240 0 0 0 83,310 83,310 0 333,240 0 1,253,925 0 0 333,240 1,921,840
1 0 1,338,659 334,665 1,003,995 0.97442 978,314 341,571 0 0 0 85,393 83,209 0 332,834 0 2,481,864 1 1.025 341,571 1,969,886
2 0 1,338,659 334,665 1,003,995 0.94950 953,290 350,110 0 0 0 87,528 83,107 0 332,429 0 3,684,475 1,315,115 2 1.051 350,110 2,019,133
3 0 1,338,659 334,665 1,003,995 0.92521 928,906 358,863 0 0 0 89,716 83,006 0 332,024 0 4,862,399 1,323,794 3 1.077 358,863 2,069,611
4 0 1,338,659 334,665 1,003,995 0.90154 905,146 367,835 0 0 0 91,959 82,905 0 331,619 0 6,016,260 1,332,490 4 1.104 367,835 2,121,352
5 1 410,250 0 0 0.87848 0 2,174,386 61,538 0 0 558,981 491,056 360,398 1,910,164 0 7,795,766 1,463,018 5 1.131 377,030 2,174,386
6 2 0 0 0 0.85601 0 2,228,745 104,614 0 0 583,340 499,347 0 1,907,838 0 9,204,257 1,505,306 6 1.160 386,456 2,228,745
7 3 0 0 0 0.83412 0 2,284,464 73,230 0 0 589,423 491,649 0 1,905,514 0 10,618,122 1,544,689 7 1.189 396,118 2,284,464
8 4 0 0 0 0.81278 0 2,341,575 68,348 0 0 602,481 489,686 0 1,903,193 0 12,031,628 1,581,509 8 1.218 406,021 2,341,575
9 5 0 0 0 0.79199 0 2,400,115 68,348 0 0 617,116 488,751 0 1,900,875 0 13,443,752 1,616,495 9 1.249 416,171 2,400,115
10 6 0 0 0 0.77174 0 0 0 0 0 0 0 0 0 0 0 0 10 1.280 426,575 2,460,118
11 7 0 0 0 0.75200 0 0 0 0 0 0 0 0 0 0 0 0 11 1.312 437,240 2,521,621
12 8 0 0 0 0.73276 0 0 0 0 0 0 0 0 0 0 0 0 12 1.345 448,171 2,584,661
13 9 0 0 0 0.71402 0 0 0 0 0 0 0 0 0 0 0 0 13 1.379 459,375 2,649,278
14 10 0 0 0 0.69575 0 0 0 0 0 0 0 0 0 0 0 0 14 1.413 470,859 2,715,510
15 11 0 0 0 0.67796 0 0 0 0 0 0 0 0 0 0 0 0 15 1.448 482,631 2,783,397
4,769,650 13,180,904 376,076 0 0 3,389,245 2,876,026 360,398 11,189,729 0

Net Present Value Equals: PV of After Tax Lease Payments $4,769,650.42

Plus PV of Cash Buyout Amount $360,398.30
Plus PV of Annual Cash Operating Outflows $11,189,729.07
Plus PV of Principle and Interest Payments $0.00
Minus PV of Tax Savings From Dep. & Cash Operating ($2,876,026.14)
Minus PV of Income From Salvage Value $0.00
Net Present Value of Lease ($13,443,752)

Rental/Custom ANALYSIS:
Include annual rental fee and
Operating costs incurred by renter Tax Adjusted
in Current Dollars. Annual Annual Tax Savings After Tax Discount Cummulative
Rental Cash From Rents Cash Factor Net Present Annual
Analysis Year Payment Operating Exp. Paid Outflows 2.6250% Value Equivalent
0 $0.00 $0.00 0.00 0.00 1.00000 -
1 $0.00 0.00 0.00 0.00 0.97442 -
2 $0.00 0.00 0.00 0.00 0.94950 - $0.00
3 $0.00 0.00 0.00 0.00 0.92521 - $0.00
4 $0.00 0.00 0.00 0.00 0.90154 - $0.00
5 $0.00 0.00 0.00 0.00 0.87848 - $0.00
6 $0.00 0.00 0.00 0.00 0.85601 - $0.00
7 $0.00 0.00 0.00 0.00 0.83412 - $0.00
8 $0.00 0.00 0.00 0.00 0.81278 - $0.00
9 $0.00 0.00 0.00 0.00 0.79199 - $0.00
10 $0.00 0.00 0.00 0.00 0.77174 - $0.00
11 $0.00 0.00 0.00 0.00 0.75200 - $0.00
12 $0.00 0.00 0.00 0.00 0.73276 - $0.00
13 $0.00 0.00 0.00 0.00 0.71402 - $0.00
14 $0.00 0.00 0.00 0.00 0.69575 - $0.00
15 $0.00 0.00 0.00 0.00 0.67796 - $0.00
This template analyzes three options for accomplishing a task with machinery. Purchase, Lease, and Rental.

Items to be entered are outlined with a double lined box.

General Information
Item to Purchase Pulled Swather
Marginal Tax Rate 21.00%
Discount Rate 5.00%
Current market Value of Trade-in $ $0.00
Undepreciatied Value of Trade-in $ $0.00
Cost of Machine Sold or Traded $ $0.00
Sell or Trade (1 or 2) 1
Machinery Group Number (1-4) 3
Depreciation Class, 3, 5, or 7yr (3 , 5 or 7) 5
Capital Gains Tax Rate (% Gain Taxed) 0.00%
Annual Cash Operating Expenses $1,120.00
Expected Annual Inflation Rate 3.00%
PURCHASE INFORMATION
Purchase Price ($) $18,000.00
Amount to Finance ($) $15,000.00
Downpayment $3,000
Interest rate 7.00%
Years to Finance Yrs 5
Number of Years for Analysis Yrs 15
Calculated Payment (Annual Payments Assumed) $3,658

Amount Expensed ($) $0.00

Investment Credit Taken 0%
Investment Credit Applicable $0
Depreciable Basis $18,000
Estimated salvage Value $1,728

Tax Adjusted Discount Rate 3.95%

PURCHASE
Depreciation
Downpayment and Annual
Year and Interest First Year Cash Operating
Principal Payment Expensing Expense
0 3,000.00 2,700.00 1,120.00
1 2,608.36 1,050.00 4,590.00 1,153.60
2 2,790.95 867.41 3,213.00 1,188.21
3 2,986.31 672.05 2,998.80 1,223.85
4 3,195.35 463.01 2,998.80 1,260.57
5 3,419.03 239.33 1,499.40 1,298.39
6 0.00 0.00 0.00 1,337.34
7 0.00 0.00 0.00 1,377.46
8 0.00 0.00 1,418.78
 9 0.00 0.00 1,461.35
10 0.00 0.00 1,505.19
11 0.00 0.00 1,550.34
12 0.00 0.00 1,596.85
13 0.00 0.00 1,644.76
14 0.00 0.00 1,694.10
15 0.00 0.00 0.00
Total Depreciation Taken $18,000.00

Lease:
Item for Lease Pulled Swather
Purchase or List Price of Lease Item $18,000.00
Lease Terms: Residual Value 30.00%
Interest Rate 7.00%
Term in Years 5
No Buyout = 1 Buyout = 2 2
Marginal Tax Rate 21.00%
Discount Factor to be Used 5.00%
Annual Cash Expense Befor Buyout $1,000.00
Annual Cash Expense After Buyout $1,500.00
Salvage as a % of Buyout 10.00%
Expected Annual Inflation Rate 3.00%

Calculated Annual Lease Payment $ $3,073.02

Calculated Buyout Amount $5,400.00
Percent of Buyout Amount Financed 80.00%
Term of Loan in Years After Buyout 5
Calculated Depreciable Basis After Buyout $4,860.00
Net Present Value of the Lease ($29,662.12)

Annual
Loan Annual Tax Savings After Tax
Analysis Repayment Cash Lease From Lease Lease
Year Year Outflows Payment Payment
0 0 3,073 645 2,428
1 0 3,073 645 2,428
2 0 3,073 645 2,428
3 0 3,073 645 2,428
4 0 3,073 645 2,428
5 1 1,080 0 0
6 2 0 0 0
7 3 0 0 0
8 4 0 0 0
9 5 0 0 0
 10 6 0 0 0
11 7 0 0 0
12 8 0 0 0
13 9 0 0 0
14 10 0 0 0
15 11 0 0 0

Net Present Value Equals: PV of After Tax Lease Payments

Plus PV of Cash Buyout Amount
Plus PV of Annual Cash Operating Outflows
Plus PV of Principle and Interest Payments
Minus PV of Tax Savings From Dep. & Cash Operating
Minus PV of Income From Salvage Value
Net Present Value of Lease

Rental/Custom ANALYSIS:
Include annual rental fee and
Operating costs incurred by renter
in Current Dollars. Annual Annual
Rental Cash
Analysis Year Payment Operating Exp.
0 $0.00 $0.00
1 $0.00 0.00
2 $0.00 0.00
3 $0.00 0.00
4 $0.00 0.00
5 $0.00 0.00
6 $0.00 0.00
7 $0.00 0.00
8 $0.00 0.00
9 $0.00 0.00
10 $0.00 0.00
11 $0.00 0.00
12 $0.00 0.00
13 $0.00 0.00
14 $0.00 0.00
15 $0.00 0.00
ry. Purchase, Lease, and Rental.

And text is in Blue

This worksheet should only be used to calculate

Net Present Values for capital items which Do Not
generate a stream of income. The best alternative is
the one that has the smallest negative net present value.
26-Aug-17

(lease, purchase and rental/custom)

Tax Adjusted
ITC Net Discount
& Tax After Tax Factor Present
Residual Credit Cash Outflow 3.9500% Value
(802.20) 3,317.80 1.00000 3,317.80
0.00 (1,426.66) 3,385.30 0.96200 3,256.67
0.00 (1,106.41) 3,740.16 0.92545 3,461.31
0.00 (1,027.89) 3,854.33 0.89028 3,431.43
0.00 (991.70) 3,927.23 0.85645 3,363.48
0.00 (637.79) 4,318.95 0.82391 3,558.41
0.00 (280.84) 1,056.50 0.79260 837.38
0.00 (289.27) 1,088.19 0.76248 829.73
0.00 (297.94) 1,120.84 0.73351 822.14
 0.00 (306.88) 1,154.46 0.70563 814.63
0.00 (316.09) 1,189.10 0.67882 807.18
0.00 (325.57) 1,224.77 0.65303 799.81
0.00 (335.34) 1,261.51 0.62821 792.50
0.00 (345.40) 1,299.36 0.60434 785.25
(1,728.12) 7.14 (26.87) 0.58138 (15.62)
0.00 0.00 0.00 0.55928 0.00
Net Present Value (After Tax) (26,862.09)

Enter as a Decimal
Enter as a Decimal
Whole Years Only

Enter as a Decimal

Enter in Current Dollars

Enter in Current Dollars

Tax Adjusted Present Annual

Discount Value of Cash Annual Annual
Factor After Tax Operating Depreciation Principle
3.9500% Lease Payment Outflows Expense Payments
1.00000 2,428 1,000 0 0
0.96200 2,335 1,030 0 0
0.92545 2,247 1,061 0 0
0.89028 2,161 1,093 0 0
0.85645 2,079 1,126 0 0
0.82391 0 1,739 729 -751
0.79260 0 1,791 1,239 -804
0.76248 0 1,845 868 -860
0.73351 0 1,900 810 -920
0.70563 0 1,957 810 -985
 0.67882 0 2,016 405 0
0.65303 0 2,076 0 0
0.62821 0 2,139 0 0
0.60434 0 2,203 0 0
0.58138 0 2,269 0 0
0.55928 0 0 0 0
11,250 25,244 4,860 -4,320

$11,250.33
$889.82
ng Outflows $18,661.36
t Payments $4,022.81
Dep. & Cash Operating ($4,848.26)
($313.94)
ent Value of Lease ($29,662)

Tax Adjusted
Tax Savings After Tax Discount Cummulative
From Rents Cash Factor Net Present Annual
Paid Outflows 3.9500% Value Equivalent
0.00 0.00 1.00000 -
0.00 0.00 0.96200 -
0.00 0.00 0.92545 - $0.00
0.00 0.00 0.89028 - $0.00
0.00 0.00 0.85645 - $0.00
0.00 0.00 0.82391 - $0.00
0.00 0.00 0.79260 - $0.00
0.00 0.00 0.76248 - $0.00
0.00 0.00 0.73351 - $0.00
0.00 0.00 0.70563 - $0.00
0.00 0.00 0.67882 - $0.00
0.00 0.00 0.65303 - $0.00
0.00 0.00 0.62821 - $0.00
0.00 0.00 0.60434 - $0.00
0.00 0.00 0.58138 - $0.00
0.00 0.00 0.55928 - $0.00
 REMAINING VALUE OF INVESTMENT

Beginning Tractor Impl't Impl't

Year Group Group Group
1 2 3
1 100.0% 100.0% 100.0%
2 62.5% 56.6% 53.1%
3 57.5% 50.1% 47.0%
4 52.8% 44.4% 41.6%
5 48.7% 39.3% 36.8%
6 44.8% 34.7% 32.6%
7 41.2% 30.7% 28.8%
8 37.9% 27.2% 25.5%
9 34.8% 24.1% 22.6%
10 32.1% 21.3% 20.0%
11 29.4% 18.9% 17.7%
12 27.0% 16.7% 15.6%

1994 Depreciation for Machinery and Equipment

150% Declining Balance Method
Year 3-Year 5-Year 7-year
0 3 5 7
1 25.00% 15.00% 10.71%
2 37.50% 25.50% 19.13%
3 25.00% 17.85% 15.03%
4 12.50% 16.66% 12.25%
5 16.66% 12.25%
6 8.33% 12.25%
7 12.25%
8 6.13%

Cummulative The depreciation schedules shown above can be

Net Present Annual changed at any time to update this program to reflect
Value Equivalent changes in tax laws or depreciation methods.
3,317.80 If you change the table, you MUST leave the shaded
6,574.47 line with 0, 3, 5, and 7 indicating the class
10,035.78 $3,685.22 life of depreciation or replace it with something similar.
13,467.21 $3,797.91 If the years (class life) do not change, simply
16,830.69 $3,887.46 enter the new depreciation rates under the
20,389.10 $4,017.01 appropriate class life.
21,226.47 $3,668.36
22,056.20 $3,412.58
22,878.34 $3,218.76
 23,692.97 $3,068.35
24,500.15 $2,949.55
25,299.96 $2,854.48
26,092.46 $2,777.69
26,877.71 $2,715.29
26,862.09 $2,587.96
- $0.00

Tax Savings Present Present Present

From Depr. Value of Present Value of Value of
Annual Annual Cash Tax Savings Value of Annual Principle
Interest Operating & From Depr. Buyout Cash & Interest
Payment Interest Oper. & Int. Amount Operating Payments
0 210 210 0 1,000 0
0 216 208 0 991 0
0 223 206 0 982 0
0 229 204 0 973 0
0 236 202 0 964 0
-302 582 479 890 1,433 -868
-250 689 546 0 1,420 -835
-194 610 465 0 1,407 -803
-133 597 438 0 1,394 -773
-69 596 420 0 1,381 -743
 0 508 345 0 1,368 0
0 436 285 0 1,356 0
0 449 282 0 1,344 0
0 463 280 0 1,331 0
0 476 277 0 1,319 0
0 0 0 0 0 0
-948 6,521 4,848 890 18,661 -4,023
NVESTMENT

Impl't
Group
4
100.0%
49.6%
43.9%
38.8%
34.4%
30.4%
26.9%
23.8%
21.1%
18.6%
16.5%
14.6%

dules shown above can be

o update this program to reflect
depreciation methods.
, you MUST leave the shaded
indicating the class
eplace it with something similar.
do not change, simply
tion rates under the
Cumulative
Net Present Annual
Value Equivalent
3,218
6,336
9,358 3,436
12,288 3,465
15,129 3,494
17,840 3,515
19,549 3,378
21,293 3,295
23,022 3,239
24,726 3,202
25,750 3,100
26,821 3,026
27,882 2,968
28,934 2,923
29,662 2,858
0 0
$10,800

$1,728

$0

###
###
###
###
0
###
###
###
 $0

Inflated Inflated
Inflation Before After
Analysis Adjustment Buyout Buyout
Year Factor CashFlow Cash_Flow
0 0 1,000 1,500
1 1.030 1,030 1,545
2 1.061 1,061 1,591
3 1.093 1,093 1,639
4 1.126 1,126 1,688
5 1.159 1,159 1,739
6 1.194 1,194 1,791
7 1.230 1,230 1,845
8 1.267 1,267 1,900
9 1.305 1,305 1,957
10 1.344 1,344 2,016
11 1.384 1,384 2,076
12 1.426 1,426 2,139
13 1.469 1,469 2,203
14 1.513 1,513 2,269
15 1.558 1,558 2,337
This template analyzes three options for accomplishing a task with machinery. Purchase, Lease, and Rental.

Items to be entered are outlined with a double lined box.

General Information
Item to Purchase Tractor 85 hp
Marginal Tax Rate 21.00%
Discount Rate 5.00%
Current market Value of Trade-in $ $0.00
Undepreciatied Value of Trade-in $ $0.00
Cost of Machine Sold or Traded $ $0.00
Sell or Trade (1 or 2) 1
Machinery Group Number (1-4) 1
Depreciation Class, 3, 5, or 7yr (3 , 5 or 7) 5
Capital Gains Tax Rate (% Gain Taxed) 0.00%
Annual Cash Operating Expenses $7,100.00
Expected Annual Inflation Rate 3.00%
PURCHASE INFORMATION
Purchase Price ($) $57,500.00
Amount to Finance ($) $50,000.00
Downpayment $7,500
Interest rate 7.00%
Years to Finance Yrs 5
Number of Years for Analysis Yrs 15
Calculated Payment (Annual Payments Assumed) $12,195

Amount Expensed ($) $0.00

Investment Credit Taken 0%
Investment Credit Applicable $0
Depreciable Basis $57,500
Estimated salvage Value $11,194

Tax Adjusted Discount Rate 3.95%

PURCHASE
Depreciation
Downpayment and Annual
Year and Interest First Year Cash Operating
Principal Payment Expensing Expense
0 7,500.00 8,625.00 7,100.00
1 8,694.53 3,500.00 14,662.50 7,313.00
2 9,303.15 2,891.38 10,263.75 7,532.39
3 9,954.37 2,240.16 9,579.50 7,758.36
4 10,651.18 1,543.36 9,579.50 7,991.11
5 11,396.76 797.77 4,789.75 8,230.85
6 0.00 0.00 0.00 8,477.77
7 0.00 0.00 0.00 8,732.10
8 0.00 0.00 8,994.07
 9 0.00 0.00 9,263.89
10 0.00 0.00 9,541.81
11 0.00 0.00 9,828.06
12 0.00 0.00 10,122.90
13 0.00 0.00 10,426.59
14 0.00 0.00 10,739.39
15 0.00 0.00 0.00
Total Depreciation Taken $57,500.00

Lease:
Item for Lease Tractor 85 hp
Purchase or List Price of Lease Item $57,500.00
Lease Terms: Residual Value 30.00%
Interest Rate 7.00%
Term in Years 5
No Buyout = 1 Buyout = 2 2
Marginal Tax Rate 21.00%
Discount Factor to be Used 5.00%
Annual Cash Expense Befor Buyout $6,500.00
Annual Cash Expense After Buyout $8,000.00
Salvage as a % of Buyout 10.00%
Expected Annual Inflation Rate 3.00%

Calculated Annual Lease Payment $ $9,816.60

Calculated Buyout Amount $17,250.00
Percent of Buyout Amount Financed 80.00%
Term of Loan in Years After Buyout 5
Calculated Depreciable Basis After Buyout $15,525.00
Net Present Value of the Lease ($130,811.36)

Annual
Loan Annual Tax Savings After Tax
Analysis Repayment Cash Lease From Lease Lease
Year Year Outflows Payment Payment
0 0 9,817 2,061 7,755
1 0 9,817 2,061 7,755
2 0 9,817 2,061 7,755
3 0 9,817 2,061 7,755
4 0 9,817 2,061 7,755
5 1 3,450 0 0
6 2 0 0 0
7 3 0 0 0
8 4 0 0 0
9 5 0 0 0
 10 6 0 0 0
11 7 0 0 0
12 8 0 0 0
13 9 0 0 0
14 10 0 0 0
15 11 0 0 0

Net Present Value Equals: PV of After Tax Lease Payments

Plus PV of Cash Buyout Amount
Plus PV of Annual Cash Operating Outflows
Plus PV of Principle and Interest Payments
Minus PV of Tax Savings From Dep. & Cash Operating
Minus PV of Income From Salvage Value
Net Present Value of Lease

Rental/Custom ANALYSIS:
Include annual rental fee and
Operating costs incurred by renter
in Current Dollars. Annual Annual
Rental Cash
Analysis Year Payment Operating Exp.
0 $0.00 $0.00
1 $0.00 0.00
2 $0.00 0.00
3 $0.00 0.00
4 $0.00 0.00
5 $0.00 0.00
6 $0.00 0.00
7 $0.00 0.00
8 $0.00 0.00
9 $0.00 0.00
10 $0.00 0.00
11 $0.00 0.00
12 $0.00 0.00
13 $0.00 0.00
14 $0.00 0.00
15 $0.00 0.00
ry. Purchase, Lease, and Rental.

And text is in Blue

This worksheet should only be used to calculate

Net Present Values for capital items which Do Not
generate a stream of income. The best alternative is
the one that has the smallest negative net present value.
26-Aug-17

(lease, purchase and rental/custom)

Tax Adjusted
ITC Net Discount
& Tax After Tax Factor Present
Residual Credit Cash Outflow 3.9500% Value
(3,302.25) 11,297.75 1.00000 11,297.75
0.00 (5,349.86) 14,157.68 0.96200 13,619.70
0.00 (4,344.38) 15,382.54 0.92545 14,235.71
0.00 (4,111.38) 15,841.51 0.89028 14,103.38
0.00 (4,013.93) 16,171.71 0.85645 13,850.26
0.00 (2,901.86) 17,523.52 0.82391 14,437.73
0.00 (1,780.33) 6,697.44 0.79260 5,308.38
0.00 (1,833.74) 6,898.36 0.76248 5,259.86
0.00 (1,888.75) 7,105.31 0.73351 5,211.79
 0.00 (1,945.42) 7,318.47 0.70563 5,164.16
0.00 (2,003.78) 7,538.03 0.67882 5,116.97
0.00 (2,063.89) 7,764.17 0.65303 5,070.20
0.00 (2,125.81) 7,997.09 0.62821 5,023.87
0.00 (2,189.58) 8,237.01 0.60434 4,977.95
(11,194.23) 95.52 (359.32) 0.58138 (208.90)
0.00 0.00 0.00 0.55928 0.00
Net Present Value (After Tax) (122,468.83)

Enter as a Decimal
Enter as a Decimal
Whole Years Only

Enter as a Decimal

Enter in Current Dollars

Enter in Current Dollars

Tax Adjusted Present Annual

Discount Value of Cash Annual Annual
Factor After Tax Operating Depreciation Principle
3.9500% Lease Payment Outflows Expense Payments
1.00000 7,755 6,500 0 0
0.96200 7,460 6,695 0 0
0.92545 7,177 6,896 0 0
0.89028 6,904 7,103 0 0
0.85645 6,642 7,316 0 0
0.82391 0 9,274 2,329 -2,400
0.79260 0 9,552 3,959 -2,568
0.76248 0 9,839 2,771 -2,747
0.73351 0 10,134 2,586 -2,940
0.70563 0 10,438 2,586 -3,146
 0.67882 0 10,751 1,293 0
0.65303 0 11,074 0 0
0.62821 0 11,406 0 0
0.60434 0 11,748 0 0
0.58138 0 12,101 0 0
0.55928 0 0 0 0
35,939 140,828 15,525 -13,800

$35,938.57
$2,842.47
ng Outflows $105,254.92
t Payments $12,850.63
Dep. & Cash Operating ($25,072.36)
($1,002.87)
ent Value of Lease ($130,811)

Tax Adjusted
Tax Savings After Tax Discount Cummulative
From Rents Cash Factor Net Present Annual
Paid Outflows 3.9500% Value Equivalent
0.00 0.00 1.00000 -
0.00 0.00 0.96200 -
0.00 0.00 0.92545 - $0.00
0.00 0.00 0.89028 - $0.00
0.00 0.00 0.85645 - $0.00
0.00 0.00 0.82391 - $0.00
0.00 0.00 0.79260 - $0.00
0.00 0.00 0.76248 - $0.00
0.00 0.00 0.73351 - $0.00
0.00 0.00 0.70563 - $0.00
0.00 0.00 0.67882 - $0.00
0.00 0.00 0.65303 - $0.00
0.00 0.00 0.62821 - $0.00
0.00 0.00 0.60434 - $0.00
0.00 0.00 0.58138 - $0.00
0.00 0.00 0.55928 - $0.00
 REMAINING VALUE OF INVESTMENT

Beginning Tractor Impl't Impl't

Year Group Group Group
1 2 3
1 100.0% 100.0% 100.0%
2 62.5% 56.6% 53.1%
3 57.5% 50.1% 47.0%
4 52.8% 44.4% 41.6%
5 48.7% 39.3% 36.8%
6 44.8% 34.7% 32.6%
7 41.2% 30.7% 28.8%
8 37.9% 27.2% 25.5%
9 34.8% 24.1% 22.6%
10 32.1% 21.3% 20.0%
11 29.4% 18.9% 17.7%
12 27.0% 16.7% 15.6%

1994 Depreciation for Machinery and Equipment

150% Declining Balance Method
Year 3-Year 5-Year 7-year
0 3 5 7
1 25.00% 15.00% 10.71%
2 37.50% 25.50% 19.13%
3 25.00% 17.85% 15.03%
4 12.50% 16.66% 12.25%
5 16.66% 12.25%
6 8.33% 12.25%
7 12.25%
8 6.13%

Cummulative The depreciation schedules shown above can be

Net Present Annual changed at any time to update this program to reflect
Value Equivalent changes in tax laws or depreciation methods.
11,297.75 If you change the table, you MUST leave the shaded
24,917.45 line with 0, 3, 5, and 7 indicating the class
39,153.16 $14,377.38 life of depreciation or replace it with something similar.
53,256.54 $15,018.97 If the years (class life) do not change, simply
67,106.81 $15,499.98 enter the new depreciation rates under the
81,544.54 $16,065.70 appropriate class life.
86,852.92 $15,009.91
92,112.78 $14,251.86
97,324.57 $13,692.60
102,488.74 $13,272.76
107,605.71 $12,954.53
112,675.91 $12,712.71
117,699.78 $12,529.82
122,677.73 $12,393.39
122,468.83 $11,798.93
- $0.00

Tax Savings Present Present Present

From Depr. Value of Present Value of Value of
Annual Annual Cash Tax Savings Value of Annual Principle
Interest Operating & From Depr. Buyout Cash & Interest
Payment Interest Oper. & Int. Amount Operating Payments
0 1,365 1,365 0 6,500 0
0 1,406 1,353 0 6,441 0
0 1,448 1,340 0 6,382 0
0 1,492 1,328 0 6,323 0
0 1,536 1,316 0 6,266 0
-966 2,639 2,175 2,842 7,641 -2,773
-798 3,005 2,382 0 7,571 -2,668
-618 2,778 2,118 0 7,502 -2,566
-426 2,761 2,025 0 7,433 -2,469
-220 2,781 1,963 0 7,366 -2,375
 0 2,529 1,717 0 7,298 0
0 2,326 1,519 0 7,232 0
0 2,395 1,505 0 7,165 0
0 2,467 1,491 0 7,100 0
0 2,541 1,477 0 7,035 0
0 0 0 0 0 0
-3,028 33,470 25,072 2,842 105,255 -12,851
NVESTMENT

Impl't
Group
4
100.0%
49.6%
43.9%
38.8%
34.4%
30.4%
26.9%
23.8%
21.1%
18.6%
16.5%
14.6%

dules shown above can be

o update this program to reflect
depreciation methods.
, you MUST leave the shaded
indicating the class
eplace it with something similar.
do not change, simply
tion rates under the
Cumulative
Net Present Annual
Value Equivalent
12,890
25,439
37,657 13,828
49,557 13,976
61,149 14,124
72,230 14,231
80,088 13,841
88,038 13,621
95,915 13,494
103,693 13,429
109,274 13,155
114,987 12,973
120,648 12,844
126,257 12,755
130,811 12,603
0 0
$39,100

$11,194

$0

###
###
###
###
0
###
###
###
 $0

Inflated Inflated
Inflation Before After
Analysis Adjustment Buyout Buyout
Year Factor CashFlow Cash_Flow
0 0 6,500 8,000
1 1.030 6,695 8,240
2 1.061 6,896 8,487
3 1.093 7,103 8,742
4 1.126 7,316 9,004
5 1.159 7,535 9,274
6 1.194 7,761 9,552
7 1.230 7,994 9,839
8 1.267 8,234 10,134
9 1.305 8,481 10,438
10 1.344 8,735 10,751
11 1.384 8,998 11,074
12 1.426 9,267 11,406
13 1.469 9,545 11,748
14 1.513 9,832 12,101
15 1.558 10,127 12,464
This template analyzes three options for accomplishing a task with machinery. Purchase, Lease, and Rental.

Items to be entered are outlined with a double lined box.

General Information
Item to Purchase Tractor 105 hp
Marginal Tax Rate 21.00%
Discount Rate 5.00%
Current market Value of Trade-in $ $0.00
Undepreciatied Value of Trade-in $ $0.00
Cost of Machine Sold or Traded $ $0.00
Sell or Trade (1 or 2) 1
Machinery Group Number (1-4) 1
Depreciation Class, 3, 5, or 7yr (3 , 5 or 7) 7
Capital Gains Tax Rate (% Gain Taxed) 0.00%
Annual Cash Operating Expenses $7,050.00
Expected Annual Inflation Rate 3.00%
PURCHASE INFORMATION
Purchase Price ($) $65,000.00
Amount to Finance ($) $55,000.00
Downpayment $10,000
Interest rate 7.00%
Years to Finance Yrs 5
Number of Years for Analysis Yrs 12
Calculated Payment (Annual Payments Assumed) $13,414

Amount Expensed ($) $0.00

Investment Credit Taken 0%
Investment Credit Applicable $0
Depreciable Basis $65,000
Estimated salvage Value $16,251

Tax Adjusted Discount Rate 3.95%

PURCHASE
Depreciation
Downpayment and Annual
Year and Interest First Year Cash Operating
Principal Payment Expensing Expense
0 10,000.00 6,961.50 7,050.00
1 9,563.99 3,850.00 12,434.50 7,261.50
2 10,233.47 3,180.52 9,769.50 7,479.35
3 10,949.81 2,464.18 7,962.50 7,703.73
4 11,716.30 1,697.69 7,962.50 7,934.84
5 12,536.44 877.55 7,962.50 8,172.88
6 0.00 0.00 7,962.50 8,418.07
7 0.00 0.00 3,984.50 8,670.61
8 0.00 0.00 8,930.73
 9 0.00 0.00 9,198.65
10 0.00 0.00 9,474.61
11 0.00 0.00 9,758.85
12 0.00 0.00 0.00
13 0.00 0.00 0.00
14 0.00 0.00 0.00
15 0.00 0.00 0.00
Total Depreciation Taken $65,000.00

Lease:
Item for Lease Tractor 105 hp
Purchase or List Price of Lease Item $65,000.00
Lease Terms: Residual Value 30.00%
Interest Rate 7.00%
Term in Years 5
No Buyout = 1 Buyout = 2 2
Marginal Tax Rate 21.00%
Discount Factor to be Used 5.00%
Annual Cash Expense Befor Buyout $6,500.00
Annual Cash Expense After Buyout $8,000.00
Salvage as a % of Buyout 10.00%
Expected Annual Inflation Rate 3.00%

Calculated Annual Lease Payment $ $11,097.03

Calculated Buyout Amount $19,500.00
Percent of Buyout Amount Financed 80.00%
Term of Loan in Years After Buyout 5
Calculated Depreciable Basis After Buyout $17,550.00
Net Present Value of the Lease ($120,297.39)

Annual
Loan Annual Tax Savings After Tax
Analysis Repayment Cash Lease From Lease Lease
Year Year Outflows Payment Payment
0 0 11,097 2,330 8,767
1 0 11,097 2,330 8,767
2 0 11,097 2,330 8,767
3 0 11,097 2,330 8,767
4 0 11,097 2,330 8,767
5 1 3,900 0 0
6 2 0 0 0
7 3 0 0 0
8 4 0 0 0
9 5 0 0 0
 10 6 0 0 0
11 7 0 0 0
12 8 0 0 0
13 9 0 0 0
14 10 0 0 0
15 11 0 0 0

Net Present Value Equals: PV of After Tax Lease Payments

Plus PV of Cash Buyout Amount
Plus PV of Annual Cash Operating Outflows
Plus PV of Principle and Interest Payments
Minus PV of Tax Savings From Dep. & Cash Operating
Minus PV of Income From Salvage Value
Net Present Value of Lease

Rental/Custom ANALYSIS:
Include annual rental fee and
Operating costs incurred by renter
in Current Dollars. Annual Annual
Rental Cash
Analysis Year Payment Operating Exp.
0 $0.00 $0.00
1 $0.00 0.00
2 $0.00 0.00
3 $0.00 0.00
4 $0.00 0.00
5 $0.00 0.00
6 $0.00 0.00
7 $0.00 0.00
8 $0.00 0.00
9 $0.00 0.00
10 $0.00 0.00
11 $0.00 0.00
12 $0.00 0.00
13 $0.00 0.00
14 $0.00 0.00
15 $0.00 0.00
ry. Purchase, Lease, and Rental.

And text is in Blue

This worksheet should only be used to calculate

Net Present Values for capital items which Do Not
generate a stream of income. The best alternative is
the one that has the smallest negative net present value.
26-Aug-17

(lease, purchase and rental/custom)

Tax Adjusted
ITC Net Discount
& Tax After Tax Factor Present
Residual Credit Cash Outflow 3.9500% Value
(2,942.42) 14,107.59 1.00000 14,107.59
0.00 (4,944.66) 15,730.83 0.96200 15,133.07
0.00 (4,290.17) 16,603.17 0.92545 15,365.33
0.00 (3,807.38) 17,310.33 0.89028 15,411.04
0.00 (3,694.96) 17,653.87 0.85645 15,119.66
0.00 (3,572.72) 18,014.15 0.82391 14,841.97
0.00 (3,439.92) 4,978.15 0.79260 3,945.67
0.00 (2,657.57) 6,013.04 0.76248 4,584.82
0.00 (1,875.45) 7,055.28 0.73351 5,175.09
 0.00 (1,931.72) 7,266.93 0.70563 5,127.80
0.00 (1,989.67) 7,484.94 0.67882 5,080.93
(16,250.85) 1,363.32 (5,128.68) 0.65303 (3,349.16)
0.00 0.00 0.00 0.62821 0.00
0.00 0.00 0.00 0.60434 0.00
0.00 0.00 0.00 0.58138 0.00
0.00 0.00 0.00 0.55928 0.00
Net Present Value (After Tax) (110,543.80)

Enter as a Decimal
Enter as a Decimal
Whole Years Only

Enter as a Decimal

Enter in Current Dollars

Enter in Current Dollars

Tax Adjusted Present Annual

Discount Value of Cash Annual Annual
Factor After Tax Operating Depreciation Principle
3.9500% Lease Payment Outflows Expense Payments
1.00000 8,767 6,500 0 0
0.96200 8,434 6,695 0 0
0.92545 8,113 6,896 0 0
0.89028 7,805 7,103 0 0
0.85645 7,508 7,316 0 0
0.82391 0 9,274 1,880 -2,713
0.79260 0 9,552 3,357 -2,903
0.76248 0 9,839 2,638 -3,106
0.73351 0 10,134 2,150 -3,323
0.70563 0 10,438 2,150 -3,556
 0.67882 0 10,751 2,150 0
0.65303 0 11,074 2,150 0
0.62821 0 0 0 0
0.60434 0 0 0 0
0.58138 0 0 0 0
0.55928 0 0 0 0
40,626 105,573 16,474 -15,600

$40,626.21
$3,213.23
ng Outflows $83,954.46
t Payments $14,526.80
Dep. & Cash Operating ($20,749.91)
($1,273.40)
ent Value of Lease ($120,297)

Tax Adjusted
Tax Savings After Tax Discount Cummulative
From Rents Cash Factor Net Present Annual
Paid Outflows 3.9500% Value Equivalent
0.00 0.00 1.00000 -
0.00 0.00 0.96200 -
0.00 0.00 0.92545 - $0.00
0.00 0.00 0.89028 - $0.00
0.00 0.00 0.85645 - $0.00
0.00 0.00 0.82391 - $0.00
0.00 0.00 0.79260 - $0.00
0.00 0.00 0.76248 - $0.00
0.00 0.00 0.73351 - $0.00
0.00 0.00 0.70563 - $0.00
0.00 0.00 0.67882 - $0.00
0.00 0.00 0.65303 - $0.00
0.00 0.00 0.62821 - $0.00
0.00 0.00 0.60434 - $0.00
0.00 0.00 0.58138 - $0.00
0.00 0.00 0.55928 - $0.00
 REMAINING VALUE OF INVESTMENT

Beginning Tractor Impl't Impl't

Year Group Group Group
1 2 3
1 100.0% 100.0% 100.0%
2 62.5% 56.6% 53.1%
3 57.5% 50.1% 47.0%
4 52.8% 44.4% 41.6%
5 48.7% 39.3% 36.8%
6 44.8% 34.7% 32.6%
7 41.2% 30.7% 28.8%
8 37.9% 27.2% 25.5%
9 34.8% 24.1% 22.6%
10 32.1% 21.3% 20.0%
11 29.4% 18.9% 17.7%
12 27.0% 16.7% 15.6%

1994 Depreciation for Machinery and Equipment

150% Declining Balance Method
Year 3-Year 5-Year 7-year
0 3 5 7
1 25.00% 15.00% 10.71%
2 37.50% 25.50% 19.13%
3 25.00% 17.85% 15.03%
4 12.50% 16.66% 12.25%
5 16.66% 12.25%
6 8.33% 12.25%
7 12.25%
8 6.13%

Cummulative The depreciation schedules shown above can be

Net Present Annual changed at any time to update this program to reflect
Value Equivalent changes in tax laws or depreciation methods.
14,107.59 If you change the table, you MUST leave the shaded
29,240.66 line with 0, 3, 5, and 7 indicating the class
44,605.99 $16,379.70 life of depreciation or replace it with something similar.
60,017.02 $16,925.51 If the years (class life) do not change, simply
75,136.68 $17,354.68 enter the new depreciation rates under the
89,978.65 $17,727.37 appropriate class life.
93,924.32 $16,231.98
98,509.14 $15,241.51
103,684.23 $14,587.34
108,812.03 $14,091.66
113,892.96 $13,711.45
110,543.80 $12,472.15
- $0.00
- $0.00
- $0.00
- $0.00

Tax Savings Present Present Present

From Depr. Value of Present Value of Value of
Annual Annual Cash Tax Savings Value of Annual Principle
Interest Operating & From Depr. Buyout Cash & Interest
Payment Interest Oper. & Int. Amount Operating Payments
0 1,365 1,365 0 6,500 0
0 1,406 1,353 0 6,441 0
0 1,448 1,340 0 6,382 0
0 1,492 1,328 0 6,323 0
0 1,536 1,316 0 6,266 0
-1,092 2,572 2,119 3,213 7,641 -3,135
-902 2,900 2,299 0 7,571 -3,016
-699 2,767 2,110 0 7,502 -2,901
-482 2,681 1,966 0 7,433 -2,791
-249 2,696 1,902 0 7,366 -2,685
 0 2,709 1,839 0 7,298 0
0 2,777 1,813 0 7,232 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
0 0 0 0 0 0
-3,423 26,349 20,750 3,213 83,954 -14,527
NVESTMENT

Impl't
Group
4
100.0%
49.6%
43.9%
38.8%
34.4%
30.4%
26.9%
23.8%
21.1%
18.6%
16.5%
14.6%

dules shown above can be

o update this program to reflect
depreciation methods.
, you MUST leave the shaded
indicating the class
eplace it with something similar.
do not change, simply
tion rates under the
Cumulative
Net Present Annual
Value Equivalent
13,902
27,423
40,578 14,901
53,378 15,053
65,836 15,207
77,706 15,310
85,994 14,862
94,288 14,588
102,546 14,427
110,694 14,335
116,153 13,983
120,297 13,573
0 0
0 0
0 0
0 0
$44,200

$16,251

$0

###
###
###
###
0
###
###
###
 $0

Inflated Inflated
Inflation Before After
Analysis Adjustment Buyout Buyout
Year Factor CashFlow Cash_Flow
0 0 6,500 8,000
1 1.030 6,695 8,240
2 1.061 6,896 8,487
3 1.093 7,103 8,742
4 1.126 7,316 9,004
5 1.159 7,535 9,274
6 1.194 7,761 9,552
7 1.230 7,994 9,839
8 1.267 8,234 10,134
9 1.305 8,481 10,438
10 1.344 8,735 10,751
11 1.384 8,998 11,074
12 1.426 9,267 11,406
13 1.469 9,545 11,748
14 1.513 9,832 12,101
15 1.558 10,127 12,464
Graph-LeasePurchase #1 Combine Graph-LeasePurchase #3 Tractor 85 hp
Annual Equivalents For Each Year of Analysis Annual Equivalents For Each Year of Analysis
2,500,000 2,500,000

2,000,000 2,000,000

1,500,000 1,500,000

1,000,000 1,000,000

500,000 500,000

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

Purchase Lease Custom/RentalYears in Analysis Purchase Lease Custom/RentalYears in Analysis

Graph-LeasePurchase #2 Pulled Swather Graph-LeasePurchase #4 Tractor 105 hp

Annual Equivalents For Each Year of Analysis 2,500,000
Annual Equivalents For Each Year of Analysis
$4,500.00
$4,000.00
2,000,000
$3,500.00
$3,000.00
1,500,000
$2,500.00
$2,000.00
1,000,000
$1,500.00
$1,000.00 500,000
$500.00
$0.00 0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Years in Analysis Purchase Lease Custom/RentalYears in Analysis
Purchase Lease Custom/Rental
Print Macro: