year CF

0 188000 ( 250000- 62000 is that the 250000 is foregone to take the other option
1 -62000
2 -62000
3 -62000
4 -62000
5 -62000
NPV -59548.0
IRR 19.37% this is more than financing rate of 8 %,hence not adviceable

8.b. NPV from compulease point of view

year 0 1 2 3 4 5
net CF0 -188000
lease rental 62000 62000 62000 62000 62000
less:depn 50000 50000 50000 50000 50000
net profit 12000 12000 12000 12000 12000
less:tax 4200 4200 4200 4200 4200
NOPAT 7800 7800 7800 7800 7800
Add:depn 57800 57800 57800 57800 57800
NPV -188000 57800 57800 57800 57800 57800
NPV 60866.3
befor tax cost of Debt 8.00% Kd
after tax cost of debt 5.20% Kd(1-t) t=35%
 9

int rate 10.00%

no of payments 8
cost of M/C 5000000
852,018
year Cf verification
4147982 amt saved by the firm by leasing
1 852018
2 852018
3 852018
4 852018
5 852018
6 852018
7 852018

0
eqip cost 6700000
CST applicable for lessee.. But have to find the CST applicable for lessor
total cost 7370000 taking 10% as ST for lessor
rental per 1000 55.28
lease rental 407413.6
probl 1

calc of WACC 13.40%

leasing CASE study
CALCULATION OF PURCHASE VALUE OF CARS

COST/CAR total cost

Santro Xing Rs. 375,000 3,750,000
Honda City 675,000 3375000
Toyota Corolla 925,000
4625000
Sonata Gold 1,350,000
1350000
Mercedes Benz 2,350,000 2350000
TOTAL COST 15,450,000 to be finnacied by bank loan

LOAN AMOUNT 15,450,000 PERIOD 5

LOAN AMORTISATION TABLE
YEAR INSTALLMENT INTEREST PRINCIPAL
0
1 Rs. 4,500,330.79 2163000 Rs. 2,337,330.79
2 Rs. 4,500,330.79 1835773.6889 Rs. 2,664,557.10
3 Rs. 4,500,330.79 1462735.6943 Rs. 3,037,595.10
4 Rs. 4,500,330.79 1037472.3805 Rs. 3,462,858.41
5 Rs. 4,500,330.79 552672.20268 Rs. 3,947,658.59

CALCULATION OF CAR RELATED EXPENSES PER ANNUM

ITEM FUEL PER MONTH TOTAL FUEL COMAINTAINENCE/MONTH
Santro Xing 2500 300000 1,000
Honda City 5000 300000 1,200
Toyota Corolla 7500 450000 1,800
Sonata Gold 12000 144000 3,000
Mercedes Benz 18000 216000 4,000

CALCULATION OF DEPN

YEAR BV DEPN INSURANCE

0 15,450,000 154500
1 11,587,500 3862500 115875
2 8,690,625 2896875 86906
3 6,517,969 2172656.25 65180
4 4,888,477 1629492.1875 48885
5 3,666,357 1222119.1406
by bank loan

INTEREST 14%

O/S LOAN
15450000
Rs. 13,112,669.21
Rs. 10,448,112.10
Rs. 7,410,517.00
Rs. 3,947,658.59
Rs. 0.00

TOTAL MAIN DRIVER INSURANCE TOTAL RUNNG COST

Rs. 120,000 0 Rs. 420,000
Rs. 72,000 0 Rs. 372,000
Rs. 108,000 240000 Rs. 798,000
Rs. 36,000 48000 Rs. 228,000
Rs. 48,000 48000 Rs. 312,000
TOTAL RUNNG COST Rs. 2,130,000

TABLE SHOWING TOTAL COST INCLUDEIN INSURANCE

YEAR COST DEPN TOTAL COST TAX SHIELD
1 Rs. 2,284,500 3862500 Rs. 6,147,000 Rs. 2,458,800.00
2 Rs. 2,245,875 2896875 Rs. 5,142,750 Rs. 2,057,100.00
3 Rs. 2,216,906 2172656.25 Rs. 4,389,563 Rs. 1,755,825.00
4 Rs. 2,195,180 1629492.1875 Rs. 3,824,672 Rs. 1,529,868.75
5 Rs. 2,178,885 1222119.1406 Rs. 3,401,004 Rs. 1,360,401.56
NPV OF TAX SHIELD
ADD:SALVAGE VALUE
DISCOUNT RATE NPV OF BUYING OPTION
BORROWIN 14%
Kd() 8.40%
 PV FACTOR PV OF TAX SHIELD
0.9225 Rs. 2,268,265.68
0.8510 Rs. 1,750,639.97
0.7851 Rs. 1,378,457.50
0.7242 Rs. 1,107,993.07
0.6681 Rs. 908,909.64
F TAX SHIELD Rs. 7,414,265.87
ALVAGE VALUE Rs. 2,064,486.60
F BUYING OPTION Rs. 9,478,752.47
 NUMBERS RENTAL LEASE RENTALS
Santro Xing 10 9,125 1095000
Honda City 5 16,325 979500
Toyota Corolla 5 27,175 1630500
Sonata Gold 1 39,250 471000
Mercedes Benz 1 61,250 735000
4911000

COST OF SUPERVISOR

SALARY 180000
OTHERS 60000
240000

TOTAL COST OF LEASING 5,151,000.00

YEAR LEASING COST POST-TAX PV FACTOR PV OF TAX SHIELD

1 5,151,000.00 2060400 0.8695652174 1791652.17391304
2 5,151,000.00 2060400 0.7561436673 1557958.4120983
3 5,151,000.00 2060400 0.6575162324 1354746.44530287
4 5,151,000.00 2060400 0.5717532456 1178040.38721989
5 5,151,000.00 2060400 0.4971767353 1024382.9454086
6906780.36394269