Question: Look at Table 26.1. How would the initial break-even operating lease rate change if rapid technological change in limo manufacturing reduces the costs of new

Look at Table 26.1. How would the initial break-even operating lease rate change if rapid technological change in limo manufacturing reduces the costs of new limos by 5 percent per year?

Year Initial cost -75 Maintenance, insurance, selling, and administrative costs - 12

Year Initial cost -75 Maintenance, insurance, selling, and administrative costs - 12 -12 -12 -12 -12 -12 -12 Tax shield on costs +4.2 +4.2 +8.40 +4.2 +4.2 +4.2 +4.2 +4.2 Depreciation tax shield Total PV at 7% --$98.15* Break-even rent (level) Break-even rent after tax PV at 7% - $98.15t +5.04 +3.02 +5.25 +3.02 +1.51 -82.80 -2.55 .60 -2.76 -4.78 -4.78 -6.29 26.18 26.18 26.18 26.18 26.18 26.18 -9.16 17.02 26.18 -9.16 17.02 -9.16 17.02 -9.16 -9.16 17.02 -9.16 17.02 -9.16 17.02 17.02

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