Question: I'm using excel, What formulas are needed to solve for yellow? ANSWER Pre-tax interest rate 10% MACRS Tax rate 40% Year 1 Year 2 Year

I'm using excel, What formulas are needed to solve for yellow?

I'm using excel, What formulas are needed to solve for yellow? ANSWER

ANSWER Pre-tax interest rate 10% MACRS Tax rate 40% Year 1 Year 2 Year 3 Year 4 After-tax interest rate 6% 33% 45% 15% 7% Lease payment $260,000 $330,000 $450,000 $150,000 $70,000 System purchase price $1,000,000 $670,000 $220,000 $70,000 $0 Maintenance $20,000 Residual value $200,000 a. Cost of owning Year 0 Year 1 Year 2 Year 3 Year 4 Net purchase price $1,000,000 $330,000 $450,000 $150,000 $70,000 Maintenance cost $20,000 -$20,000 -$20,000 -$20,000 Maintenance tax savings $8,000 Depreciation tax savings Residual value Tax on residual value 4 Net cash flow $1,012,000 5 PV cost of owning 6

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