Value the lease for the following example using 13 steps. Apply the generalized lease valuation model to the lease considered by Alberton Shop company, assuming the frm is currently in a nontaxpaying position but expects commencing tax payments in year 3 ( G = 3). All tax benefits are assumed to be carried forward and fully absorbed in year 3.

from the table below start with Step 1: compute the PV of the lease payments from year 0 to year 2 at 8%. since $13,000 is paid each year

STEP 2 : Compute the PV of the following years as follow with giving data:

year	after tax lease payment	depreciation tax shield	tax credit	residual
3	$8,200	$5,100	$6500	0
4	$ 8200	$ 5,100	0	0
5	$8200	$5100	0	$2,500

step 3 : compute the difference between the depreciation tax shield and the lease payment shield for years 0 to 2. add it to the following information to the table

year	depreciation tax shield	lease payment tax shield	difference
0	0	4,300
1	3,400	4,300
2	4,500	4,300

now complate step from step 4 to step 14 to calculate the value of NPV of the lease using the result from step 1 to 3