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{"sheet":"Page 180","index":0,"n_rows":9,"n_cols":3,"rows_kept":9,"cut":false,"hidden":false,"merged":[[0,0,0,2]]}
["HOW NOT TO ANALYZE A LEASE"]
["Asset cost",{"$f":"'Pages 182,83'!B2","v":600000}]
["Interest rate",{"$f":"'Pages 182,83'!B3","v":0.12}]
["Lease rental payment",140000]
["Annual depreciation",{"$f":"'Pages 182,83'!B5","v":100000}]
["Tax rate",{"$f":"'Pages 182,83'!B6","v":0.4}]
[]
["NPV (leasing)",{"$f":"-PV(B3,5,B4*(1-B6))+B4*(1-B6)","v":386801.20099698054},{"$f":"GETFORMULA(B8)","v":"<--  =-PV(B3,5,B4*(1-B6))+B4*(1-B6)"}]
["NPV (buying)",{"$f":"B2+PV(B3,6,B6*B5)","v":435543.70705910691},{"$f":"GETFORMULA(B9)","v":"<--  =B2+PV(B3,6,B6*B5)"}]

{"sheet":"Pages 182,83","index":1,"n_rows":34,"n_cols":9,"rows_kept":34,"cut":false,"hidden":false,"merged":[[23,3,23,4],[0,0,0,8],[32,0,32,1],[25,7,30,7],[33,2,33,3]]}
["EQUIVALENT-LOAN METHOD—THE LESSEE POINT OF VIEW"]
["Asset cost",600000]
["Interest rate",0.12]
["Lease rental payment",140000]
["Annual depreciation",{"$f":"B2/6","v":100000}]
["Tax rate",0.4]
[]
["Year",0,1,2,3,4,5,6]
["After-tax cash flows from leasing"]
["After-tax lease rental",{"$f":"-$B$4*(1-$B$6)","v":-84000},-84000,-84000,-84000,-84000,-84000,null,{"$f":"GETFORMULA(G10)","v":"<--  =-$B$4*(1-$B$6)"}]
[]
["After-tax cash flows from buying the asset"]
["Asset cost",{"$f":"-B2","v":-600000}]
["Depreciation tax shield",null,{"$f":"$B$5*$B$6","v":40000},40000,40000,40000,40000,40000,{"$f":"GETFORMULA(G14)","v":"<--  =$B$5*$B$6"}]
["Net cash from buying",{"$f":"B13+B14","v":-600000},{"$f":"C13+C14","v":40000},40000,40000,40000,40000,40000,{"$f":"GETFORMULA(G15)","v":"<--  =G13+G14"}]
[]
["Differential cash flow:  Lease saves lessee"]
["Lease minus buy",{"$f":"B10-B15","v":516000},{"$f":"C10-C15","v":-124000},-124000,-124000,-124000,-124000,-40000,{"$f":"GETFORMULA(G18)","v":"<--  =G10-G15"}]
[]
["IRR of differential cash flow",{"$f":"IRR(B18:H18,0)","v":8.2997673770548008E-2},{"$f":"GETFORMULA(B20)","v":"<--  =IRR(B18:H18,0)"}]
["Decision??",{"$f":"IF(B20<(1-B6)*B3,\"Lease\",\"Buy\")","v":"Buy"},{"$f":"GETFORMULA(B21)","v":"<--  =IF(B20<(1-B6)*B3,\"Lease\",\"Buy\")"}]
[]
[]
[{"$f":"ggetformula(C26)","v":" =D26+B26-B27"},null,null,"Split of loan repayment between:",null,null,{"$f":"ggetformula(E26)","v":" =B26-B27"}]
["Year","Principal at beg. year","Loan payment, end year","Interest","Repayment of principal","After-tax loan repayment","Lease minus buy cash flows, years 1-6"]
[1,{"$f":"NPV((1-$B$6)*$B$3,G26:$G$31)","v":532070.11735883297},{"$f":"D26+B26-B27","v":149539.36563322402},{"$f":"$B$3*B26","v":63848.414083059957},{"$f":"B26-B27","v":85690.951550164027},{"$f":"(1-$B$6)*D26+E26","v":124000},{"$f":"-TRANSPOSE(C18:H18)","v":124000},{"$f":"GETFORMULA(G26)","v":"<--  {=-TRANSPOSE(C18:H18)}"}]
[2,{"$f":"NPV((1-$B$6)*$B$3,G27:$G$31)","v":446379.16580866894},{"$f":"D27+B27-B28","v":145426.19995881605},53565.499897040274,{"$f":"B27-B28","v":91860.700061775802},123999.99999999997,124000]
[3,{"$f":"NPV((1-$B$6)*$B$3,G28:$G$31)","v":354518.46574689314},{"$f":"D28+B28-B29","v":141016.88635585087},42542.215889627172,{"$f":"B28-B29","v":98474.670466223703},124000,124000]
[4,{"$f":"NPV((1-$B$6)*$B$3,G29:$G$31)","v":256043.79528066944},{"$f":"D29+B29-B30","v":136290.10217347209},30725.25543368033,{"$f":"B29-B30","v":105564.84673979174},123999.99999999994,124000]
[5,{"$f":"NPV((1-$B$6)*$B$3,G30:$G$31)","v":150478.9485408777},{"$f":"D30+B30-B31","v":131222.98952996213},18057.473824905323,{"$f":"B30-B31","v":113165.51570505681},124000,124000]
[6,{"$f":"NPV((1-$B$6)*$B$3,G31:$G$31)","v":37313.432835820895},{"$f":"D31+B31-K9","v":41791.044776119401},4477.6119402985069,{"$f":"B31-K9","v":37313.432835820895},40000,40000]
[]
[{"$f":"ggetformula(B26)","v":" =NPV((1-$B$6)*$B$3,G26:$G$31)"}]
[null,null,{"$f":"ggetformula(D26)","v":" =$B$3*B26"}]

{"sheet":"Page 185","index":2,"n_rows":30,"n_cols":8,"rows_kept":30,"cut":false,"hidden":false,"merged":[[0,0,0,7],[22,3,22,4]]}
["THE LESSOR'S PROBLEM\nCalculating the lowest acceptable lease rate"]
["Asset cost",600000]
["Interest rate",0.12]
["Lowest acceptable lease payment",134821.93951996558,"<-- Computed either with Goal Seek or Solver"]
["Annual depreciation",{"$f":"B2/6","v":100000}]
["Tax rate",0.4]
[]
["Year",0,1,2,3,4,5,6]
["Lessor after-tax cash flows from leasing"]
["After-tax lease rental",{"$f":"$B$4*(1-$B$6)","v":80893.163711979345},80893.163711979345,80893.163711979345,80893.163711979345,80893.163711979345,80893.163711979345]
[]
["Lessor after-tax cash flows from buying the asset"]
["Asset cost",{"$f":"-B2","v":-600000}]
["Depreciation tax shield",null,{"$f":"$B$5*$B$6","v":40000},40000,40000,40000,40000,40000]
["Net cash from buying",{"$f":"B13+B14","v":-600000},40000,40000,40000,40000,40000,40000]
[]
["Lessor cash flows"]
["Lease + buy",{"$f":"B10+B15","v":-519106.83628802066},120893.16371197934,120893.16371197934,120893.16371197934,120893.16371197934,120893.16371197934,40000]
[]
["IRR of differential cash flow",{"$f":"IRR(B18:H18)","v":7.2199999982448526E-2},{"$f":"GETFORMULA(B20)","v":"<--  =IRR(B18:H18)"}]
[]
[]
[null,null,null,"Split of loan repayment between:"]
["Year","Principal at beg. year","Loan payment, end year","Interest","Repayment of principal","After-tax loan repayment","Lease minus buy cash flows, years 1-6"]
[1,{"$f":"NPV((1-$B$6)*$B$3,G25:$G$30)","v":-519399.40163275873},{"$f":"D25+B25-B26","v":-145824.33499035175},{"$f":"$B$3*B25","v":-62327.928195931047},{"$f":"B25-B26","v":-83496.406794420676},{"$f":"(1-$B$6)*D25+E25","v":-120893.1637119793},{"$f":"-TRANSPOSE(C18:H18)","v":-120893.16371197934}]
[2,{"$f":"NPV((1-$B$6)*$B$3,G26:$G$30)","v":-435902.99483833805},{"$f":"D26+B26-B27","v":-141816.50746421952},-52308.359380600567,{"$f":"B26-B27","v":-89508.148083618958},-120893.1637119793,-120893.16371197934]
[3,{"$f":"NPV((1-$B$6)*$B$3,G27:$G$30)","v":-346394.8467547191},{"$f":"D27+B27-B28","v":-137520.11635620584},-41567.381610566292,{"$f":"B27-B28","v":-95952.734745639551},-120893.16371197933,-120893.16371197934]
[4,{"$f":"NPV((1-$B$6)*$B$3,G28:$G$30)","v":-250442.11200907954},{"$f":"D28+B28-B29","v":-132914.38508841512},-30053.053441089545,{"$f":"B28-B29","v":-102861.3316473256},-120893.16371197932,-120893.16371197934]
[5,{"$f":"NPV((1-$B$6)*$B$3,G29:$G$30)","v":-147580.78036175395},{"$f":"D29+B29-B30","v":-127977.04116934352},-17709.693643410472,{"$f":"B29-B30","v":-110267.34752593306},-120893.16371197934,-120893.16371197934]
[6,{"$f":"NPV((1-$B$6)*$B$3,G30:$G$30)","v":-37313.432835820895},{"$f":"D30+B30-K9","v":-41791.044776119401},-4477.6119402985069,{"$f":"B30-K9","v":-37313.432835820895},-40000,-40000]

{"sheet":"Page 187","index":3,"n_rows":37,"n_cols":7,"rows_kept":37,"cut":false,"hidden":false,"merged":[[0,0,0,6],[20,0,20,6]]}
["GREENVILLE ELECTRIC CORP."]
["Turbine cost",12000000]
["Greenville's borrowing rate",0.06]
["Lease payment",2300000]
[]
["Year",0,1,2,3,4,5]
["Lessee after-tax lease costs"]
["After-tax lease rental",{"$f":"-$B$4","v":-2300000},-2300000,-2300000,-2300000,-2300000,-2300000]
[]
["Lessee after-tax purchase costs"]
["Asset cost",{"$f":"-B2","v":-12000000}]
["Depreciation tax shield (Greenville Electric's tax rate = 0)",null,0,0,0,0,0]
["Net cash from buying",{"$f":"B11+B12","v":-12000000},0,0,0,0,0]
[]
["Cash saved by leasing"]
["Lease - purchase cash flows",{"$f":"B8-B13","v":9700000},{"$f":"C8+C13","v":-2300000},{"$f":"D8+D13","v":-2300000},{"$f":"E8+E13","v":-2300000},{"$f":"F8+F13","v":-2300000},{"$f":"G8+G13","v":-2300000}]
[]
["IRR of differential cash flow",{"$f":"IRR(B16:G16,0)","v":5.9561688558668946E-2},{"$f":"GETFORMULA(B18)","v":"<--  =IRR(B16:G16,0)"}]
["Greenville's after-tax borrowing cost",{"$f":"B3","v":0.06},{"$f":"GETFORMULA(B19)","v":"<--  =B3"}]
[]
["UNITED TURBINE LEASING CORPORATION"]
["Turbine cost",{"$f":"B2","v":12000000}]
["Lease payment",{"$f":"B4","v":2300000}]
["Depreciable life (years)",3]
[{"$f":"\"Depreciation (straight line, \"&TEXT(B24,\"0\")&\" years)\"","v":"Depreciation (straight line, 3 years)"},{"$f":"B22/B24","v":4000000}]
["United Turbine's borrowing rate",{"$f":"B3","v":0.06}]
["United Turbine's corporate tax rate",0.4]
[]
["Year",0,1,2,3,4,5]
["Lessor cash flows"]
["Equipment cost",{"$f":"-B22","v":-12000000}]
["Lease payment, after tax",{"$f":"(1-$B$27)*$B$4","v":1380000},1380000,1380000,1380000,1380000,1380000]
["Depreciation tax shield",null,{"$f":"IF(C29<=$B$24,$B$25*$B$27,0)","v":1600000},{"$f":"IF(D29<=$B$24,$B$25*$B$27,0)","v":1600000},{"$f":"IF(E29<=$B$24,$B$25*$B$27,0)","v":1600000},{"$f":"IF(F29<=$B$24,$B$25*$B$27,0)","v":0},{"$f":"IF(G29<=$B$24,$B$25*$B$27,0)","v":0}]
["Total lessor cash flow",{"$f":"SUM(B31:B33)","v":-10620000},2980000,2980000,2980000,1380000,1380000]
[]
["IRR of lessor cash flows",{"$f":"IRR(B34:G34)","v":3.8589236379922287E-2},{"$f":"GETFORMULA(B36)","v":"<--  =IRR(B34:G34)"}]
["United Turbine's after-tax borrowing cost",{"$f":"B26*(1-B27)","v":3.5999999999999997E-2},{"$f":"GETFORMULA(B37)","v":"<--  =B26*(1-B27)"}]

{"sheet":"Page 188","index":4,"n_rows":23,"n_cols":9,"rows_kept":23,"cut":false,"hidden":false,"merged":[[0,0,0,8]]}
["RESIDUAL VALUES IN LEASE ANALYSIS"]
["Asset cost",600000]
["Interest rate",0.12]
["Lease rental payment",140000]
["Annual depreciation",{"$f":"B2/6","v":100000}]
["Tax rate",0.4]
["Residual value",100000,"<-- Anticipated to be realized in year 7; fully taxed"]
[]
["Year",0,1,2,3,4,5,6,7]
["After-tax cash flows from leasing"]
["After-tax lease rental",{"$f":"-$B$4*(1-$B$6)","v":-84000},-84000,-84000,-84000,-84000,-84000]
[]
["After-tax cash flows from buying the asset"]
["Asset cost",{"$f":"-B2","v":-600000}]
["Depreciation tax shield",null,{"$f":"$B$5*$B$6","v":40000},40000,40000,40000,40000,40000]
["After-tax residual",null,null,null,null,null,null,null,{"$f":"(1-B6)*B7","v":60000}]
["Net cash from buying",{"$f":"SUM(B14:B16)","v":-600000},{"$f":"SUM(C14:C16)","v":40000},40000,40000,40000,40000,40000,60000]
[]
["Differential cash flow"]
["Lease minus buy",{"$f":"B11-B17","v":516000},-124000,-124000,-124000,-124000,-124000,-40000,-60000]
[]
["IRR of differential cash flow",{"$f":"IRR(B20:I20,0)","v":0.10494253135808052},{"$f":"GETFORMULA(B22)","v":"<--  =IRR(B20:I20,0)"}]
["Decision??",{"$f":"IF(B22<(1-B6)*B3,\"Lease\",\"Buy\")","v":"Buy"},{"$f":"GETFORMULA(B23)","v":"<--  =IF(B22<(1-B6)*B3,\"Lease\",\"Buy\")"}]

{"sheet":"Page 189","index":5,"n_rows":24,"n_cols":10,"rows_kept":24,"cut":false,"hidden":false,"merged":[[0,0,0,8]]}
["RESIDUAL VALUES IN LEASE ANALYSIS\nEstimated residual value multiplied by certainty-equivalence factor which represents \nuncertainty about realizing residual"]
["Asset cost",600000]
["Interest rate",0.12]
["Lease rental payment",140000]
["Annual depreciation",{"$f":"B2/6","v":100000}]
["Tax rate",0.4]
["Residual value",100000,"<-- Anticipated to be realized in year 7; fully taxed"]
["Certainty-equivalence factor for residual",0.7]
[]
["Year",0,1,2,3,4,5,6,7]
["After-tax cash flows from leasing"]
["After-tax lease rental",{"$f":"-$B$4*(1-$B$6)","v":-84000},-84000,-84000,-84000,-84000,-84000]
[]
["After-tax cash flows from buying the asset"]
["Asset cost",{"$f":"-B2","v":-600000}]
["Depreciation tax shield",null,{"$f":"$B$5*$B$6","v":40000},40000,40000,40000,40000,40000]
["After-tax residual",null,null,null,null,null,null,null,{"$f":"(1-B6)*B7*B8","v":42000},{"$f":"GETFORMULA(I17)","v":"<--  =(1-B6)*B7*B8"}]
["Net cash from buying",{"$f":"SUM(B15:B17)","v":-600000},40000,40000,40000,40000,40000,40000,42000]
[]
["Differential cash flow"]
["Lease minus buy",{"$f":"B12-B18","v":516000},-124000,-124000,-124000,-124000,-124000,-40000,-42000]
[]
["IRR of differential cash flow",{"$f":"IRR(B21:I21,0)","v":9.8764186368520912E-2},{"$f":"GETFORMULA(B23)","v":"<--  =IRR(B21:I21,0)"}]
["Decision??",{"$f":"IF(B23<(1-B6)*B3,\"Lease\",\"Buy\")","v":"Buy"},{"$f":"GETFORMULA(B24)","v":"<--  =IF(B23<(1-B6)*B3,\"Lease\",\"Buy\")"}]

{"sheet":"Page 192","index":6,"n_rows":51,"n_cols":10,"rows_kept":51,"cut":false,"hidden":false,"merged":[[7,6,9,8],[0,0,0,8]]}
["BASIC LEVERAGED LEASE EXAMPLE"]
["Cost of asset",1000000]
["Lease term",15]
["Residual value",300000,"<-- Realized year 16"]
["Equity",200000]
["Debt",{"$f":"B2-B5","v":800000},"<-- 15-year term loan, equal payments of interest and principal"]
["Interest",0.1]
["Annual debt payment",{"$f":"PMT(B7,B3,-B6)","v":105179.02150989778},{"$f":"GETFORMULA(B8)","v":"<--  =PMT(B7,B3,-B6)"},null,null,null,{"$f":"ggetformula(I14)","v":" =(1-tax)*C14+tax*D14-(1-tax)*G14-H14"}]
["Annual rent received",110000]
["Tax rate",0.4]
[]
["Year","Equity Invested","Rental or salvage","Depreciation","Principal at start of year","Loan payment","Interest","Repayment of principal","Cash flow to equity"]
[0,{"$f":"-B5","v":-200000},null,null,null,null,null,null,{"$f":"B13","v":-200000}]
[1,null,{"$f":"$B$9","v":110000},{"$f":"0.1428*B2","v":142800},{"$f":"B6","v":800000},{"$f":"$B$8","v":105179.02150989778},{"$f":"$B$7*E14","v":80000},{"$f":"F14-G14","v":25179.021509897779},{"$f":"(1-tax)*C14+tax*D14-(1-tax)*G14-H14","v":49940.978490102221}]
[2,null,{"$f":"C14","v":110000},{"$f":"0.2449*B2","v":244900},{"$f":"E14-H14","v":774820.97849010222},105179.02150989778,{"$f":"$B$7*E15","v":77482.097849010228},{"$f":"F15-G15","v":27696.923660887551},{"$f":"(1-tax)*C15+tax*D15-(1-tax)*G15-H15","v":89773.817629706318}]
[3,null,110000,{"$f":"0.1749*B2","v":174900},{"$f":"E15-H15","v":747124.0548292147},105179.02150989778,{"$f":"$B$7*E16","v":74712.405482921473},{"$f":"F16-G16","v":30466.616026976306},60665.940683270819]
[4,null,110000,{"$f":"0.125*B2","v":125000},716657.43880223844,105179.02150989778,71665.743880223847,33513.277629673932,39487.276042191763]
[5,null,110000,{"$f":"0.0892*B2","v":89200},683144.16117256449,105179.02150989778,68314.416117256449,36864.60539264133,23826.744937004805]
[6,null,110000,{"$f":"D18","v":89200},646279.55577992322,105179.02150989778,64627.955577992325,40551.065931905454,22352.160721299151]
[7,null,110000,{"$f":"D19","v":89200},605728.48984801781,105179.02150989778,60572.848984801785,44606.172525095993,20730.118084022935]
[8,null,110000,{"$f":"0.0448*B2","v":44800},561122.31732292182,105179.02150989778,56112.231732292188,49066.789777605591,1185.871183019095]
[9,null,110000,null,512055.52754531626,105179.02150989778,51205.552754531629,53973.46875536615,-18696.800408085124]
[10,null,110000,null,458082.0587899501,105179.02150989778,45808.20587899501,59370.815630902769,-20855.739158299773]
[11,null,110000,null,398711.24315904733,105179.02150989778,39871.124315904737,65307.897193993042,-23230.571783535888]
[12,null,110000,null,333403.34596505429,105179.02150989778,33340.334596505432,71838.686913392346,-25842.887671295604]
[13,null,110000,null,261564.65905166196,105179.02150989778,26156.465905166198,79022.555604731577,-28716.435147831296]
[14,null,110000,null,182542.10344693038,105179.02150989778,18254.210344693038,86924.811165204737,-31877.337372020556]
[15,null,110000,null,95617.292281725648,105179.02150989778,9561.7292281725659,95617.292281725211,-35354.32981862875]
[16,null,{"$f":"B4","v":300000},null,null,null,null,null,180000]
[]
[null,null,null,null,null,null,"IRR of cash flows",null,{"$f":"IRR(I13:I29)","v":0.12456684724551903},{"$f":"GETFORMULA(I31)","v":"<--  =IRR(I13:I29)"}]
[]
["Data table:  NPV of leveraged lease cash flows"]
[null,{"$f":"I13+NPV(A34,I14:I29)","v":103388.80641092022},{"$f":"GETFORMULA(B34)&\" , table header\"","v":"<--  =I13+NPV(A34,I14:I29) , table header"}]
[0,103388.80641092022]
[0.01,88796.469160256267]
[0.02,76063.820921954175]
[0.03,64865.215657213354]
[0.04,54936.28770239462]
[0.05,46062.10930652832]
[0.06,38067.687377909489]
[7.0000000000000007E-2,30810.326460545126]
[0.08,24173.483012868906]
[0.09,18061.813253532309]
[0.1,12397.177727314178]
[0.12,2163.7258875435218]
[0.14000000000000001,-6916.0497910633276]
[0.16,-15108.06871324245]
[0.18,-22596.175437609811]
[0.2,-29509.330321692891]
[0.22,-35939.622552630841]