[XLS]Lease vs Purchase vs Rental Analysis - Montana State · Web viewModule1 Macros Graphs LeasePurch4 LeasePurch3 LeasePurch2 LeasePurch1 Introduction Print_Area_MI PRINT_RESULTS

Introduction

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For more information about this program, contact:Duane Griffith (406) 994-2580210 Linfield HallMontana State UniversityBozeman, Mt. 59717

Please read the cautions, assumptions and interpretations of results listedbelow before you run this program. It is very important that you understandhow to use this program before interpreting results.

Cautions and Assumptions:1) This program is designed so that you can compare many different

possible combinations of lease, purchasing and custom orrenting machinery to accomplish a particular task. However, youmust be careful that you are making relavent comparisons. Themistake that this program will not account for is an incorrect specification of the number of years for comparison purposes when evaluating a lease with a buyout option to a purchase. The number of years specified for analysis must be at least as long as the combined lease term and finance term for the buyout.

Example: Lease for 5 years and finance for 5 years, termmust be at least 10 years long.

2) Year 0 in the analysis is counted as a full year for financial and economic considerations. This means that a 10 year analysiswill end in year 9 listed on the results tables for Purchases,Leases and Custom/Rental.

3) If indicated the lease analysis has no buy out option, the program assumesthe work must be done, hence consecutive leases of equal costs are executedfor the full fifteen year analysis. This allows for comparisons with buyout options.

4) If the buyout option is exercised, it occurs at the beginning of the year followingthe last year in the lease. The basis for depreciation is the buyout valueand the buyout value is depreciated for class life of the piece of equipmentspecified using the strait line method. Salvage value is calculated as

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Introduction

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a percent of the buyout amount, not purchase price. Full depreciation is takenduring the first year of the buyout.

5) Annual expenses should include all cash expense (not depreciation) incurred by the leasee.Expenses before the buyout and after the buyout are sepreated to account forleases which may cover some of the variable costs associated with equipment operation.

6) For rental analysis, include the annual cost of renting equipment and theannual cash operating expenses incurred by the renter. The program assumes thesecosts will inflate each year by the inflation factor specified in the input section.The rental analysis uses the same discount factors (tax adjusted) as the leaseportion of this template.

7) The Rental Portion of this program can be used to compare getting thework done by a "Custom Operator." You can simply fill inthe custom rate charged and leave the operating expense blank.Remember to make fair comparisons. If you are looking at purchasing a combine, you must use only the custom ratefor the combine when making a comparison, not the rate of cutting and hauling.

8) The discount factor specified in the input section is adjusted by the marginal taxrate specified. The assumption is that alterntive investments would generate a taximpact and therefore the discount rate should be adjusted for these implicationsfrom alternative investments.

9) The results of the purchase option can be heavily influenced by the residual value calculated for the piece of equipment. Make sure that you check the residual value calculated and that you are using the numberof years for the analysis that you actually plan to keep the piece of equipment for the purchase option or the combination lease & buyoutoption. If you are likely to keep a piece of equipment 15 years, use 15 years, not a shorter period of time.

Interpretation of Results:

Introduction

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10) The results of the program are presented in three tables. Each option analyzed, 1) Purchase, 2) Lease, 3) Rental/Custom, has a table ofresults calculated for that option. In each table, detail is presentedfor the financial and economic implications of that option. Comparisons of the different options is accomplished using one of two possible outputsfrom this program. At the end of each of the three tables for each option aretwo columns. The first is labeled " Cummulative Net Present Value."The second is labeled "Annual Equivalent."

11) The Net Present Value is the total dollars spent (after taxes) in currentdollars. All future expenses and cash outflows are discounted back tothe present. This allows an apples to apples comparison of different amounts of money being spent purchase vs lease vs rental etc.

12) The Annual Equivalent calculation is similar but can be used to compareoptions that do not have the same time frame. An example, would be a leasethat you plan for 5 years with a purchase that will cover a 10 year period.

Comparing options with equal lengths of time.13) If your analysis uses the same time period for each options, say 12 years

for the Purchase, Lease, and Rental/Custom, you can use the CummulativeNet Present Value column. Follow it down to the year (year 11 -see item number 2) above) to get the results for year 12. The option that costs the least amount of money (in current dollars) is the one withthe lowest Net Present Value calculation.

Comparing options of Unequal length.14) If your analysis uses differing time periods, you must use the Annual Equivalent

column to compare numbers for the options considered. The annual equivalentconverts the Net Present Value for the entire time period to an equivalent amountof money (on an annual basis). Since the conversion is to annual, differenttimes periods can be compared. The selection criteria is again the option with the lowest "Annual Equivalent."Note: Some of your analysis may have more rows (years) than you wanted to analyze. This will be true for a lease that has no buyout option specified. If you wish to analyze a 5 year lease without a buyout at the end of the lease,

Introduction

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you will note the entire lease table is filled. Simple go down row 4 (remember year 0 counts as a full year) and read accross to the endof row 4 to get the Net Present Value and Annual Equivalent for a 5 year lease.

This template analyzes three options for accomplishing a task with machinery. Purchase, Lease, and Rental.REMAINING VALUE OF INVESTMENT

Items to be entered are outlined with a double lined box. And text is in Blue

General Information Used for Lease and Purchase as necessary Beginning Tractor Impl't Impl't Impl'tItem to Purchase Combine Year Group Group Group GroupMarginal Tax Rate 25.00% 1 2 3 4 Discount Rate 3.50% 1 100.0% 100.0% 100.0% 100.0%Current market Value of Trade-in $ $0.00 This worksheet should only be used to calculate 2 62.5% 56.6% 53.1% 49.6%Undepreciatied Value of Trade-in $ $0.00 Net Present Values for capital items which Do Not 3 57.5% 50.1% 47.0% 43.9%Cost of Machine Sold or Traded $ $0.00 generate a stream of income. The best alternative is 4 52.8% 44.4% 41.6% 38.8%Sell or Trade (1 or 2) 1 the one that has the smallest negative net present value. 5 48.7% 39.3% 36.8% 34.4%Machinery Group Number (1-4) 1 06-May-23 6 44.8% 34.7% 32.6% 30.4%Depreciation Class, 3, 5, or 7yr (3 , 5 or 7) 5 7 41.2% 30.7% 28.8% 26.9%Capital Gains Tax Rate (% Gain Taxed) 0.00% 8 37.9% 27.2% 25.5% 23.8%Annual Cash Operating Expenses $1,731,840.00 9 34.8% 24.1% 22.6% 21.1%Expected Annual Inflation Rate 2.50% 10 32.1% 21.3% 20.0% 18.6%PURCHASE INFORMATION 11 29.4% 18.9% 17.7% 16.5%Purchase Price ($) $2,735,000.00 12 27.0% 16.7% 15.6% 14.6%Amount to Finance ($) $0.00 Downpayment $2,735,000 Interest rate 10.00%Years to Finance Yrs 5 Number of Years for Analysis Yrs 10 (lease, purchase and rental/custom) 1994 Depreciation for Machinery and EquipmentCalculated Payment (Annual Payments Assumed) $0 150% Declining Balance Method

Year 3-Year 5-Year 7-yearAmount Expensed ($) $0.00 0 3 5 7 Investment Credit Taken 0% 1 25.00% 15.00% 10.71%Investment Credit Applicable $0 2 37.50% 25.50% 19.13%Depreciable Basis $2,735,000 3 25.00% 17.85% 15.03%Estimated salvage Value $807,876 4 12.50% 16.66% 12.25% ###

5 16.66% 12.25%Tax Adjusted Discount Rate 2.63% 6 8.33% 12.25% $807,876

7 12.25%8 6.13%

PURCHASEDepreciation Tax Adjusted

Downpayment and Annual ITC Net Discount Cummulative The depreciation schedules shown above can beYear and Interest First Year Cash Operating & Tax After Tax Factor Present Net Present Annual changed at any time to update this program to reflect

Principal Payment Expensing Expense Residual Credit Cash Outflow 2.6250% Value Value Equivalent changes in tax laws or depreciation methods. $0 0 2,735,000 410,250 1,731,840 -535,523 3,931,318 1.00000 3,931,318 3,931,318 If you change the table, you MUST leave the shaded1 0 0 697,425 1,775,136 0 -618,140 1,156,996 0.97442 1,127,401 5,058,719 line with 0, 3, 5, and 7 indicating the class 0 2 0 0 488,198 1,819,514 0 -576,928 1,242,586 0.94950 1,179,832 6,238,551 2,226,752 life of depreciation or replace it with something similar. 0 3 0 0 455,651 1,865,002 0 -580,163 1,284,839 0.92521 1,188,746 7,427,298 2,022,090 If the years (class life) do not change, simply 0 4 0 0 455,651 1,911,627 0 -591,820 1,319,808 0.90154 1,189,866 8,617,163 1,908,541 enter the new depreciation rates under the 0 5 0 0 227,826 1,959,418 0 -546,811 1,412,607 0.87848 1,240,954 9,858,117 1,850,055 appropriate class life. 0 6 0 0 0 2,008,403 0 -502,101 1,506,303 0.85601 1,289,416 11,147,533 1,823,118 0 7 0 0 0 2,058,614 0 -514,653 1,543,960 0.83412 1,287,846 12,435,379 1,809,057 0 8 0 0 2,110,079 0 -527,520 1,582,559 0.81278 1,286,277 13,721,657 1,803,657 0 9 0 0 2,162,831 -807,876 -338,739 1,016,216 0.79199 804,837 14,526,493 1,746,685

10 0 0 0 0 0 0 0.77174 0 0 011 0 0 0 0 0 0 0.75200 0 0 012 0 0 0 0 0 0 0.73276 0 0 013 0 0 0 0 0 0 0.71402 0 0 014 0 0 0 0 0 0 0.69575 0 0 015 0 0 0 0 0 0 0.67796 0 0 0 $0

Total Depreciation Taken 2,735,000 Net Present Value (After Tax) -14,526,493

Lease:Item for Lease CombinePurchase or List Price of Lease Item $2,735,000.00 Lease Terms: Residual Value 15.00% Enter as a Decimal Interest Rate 50.00% Enter as a Decimal Term in Years 5 Whole Years Only No Buyout = 1 Buyout = 2 2 Marginal Tax Rate 25.00% Enter as a DecimalDiscount Factor to be Used 3.50%Annual Cash Expense Befor Buyout $333,240.00 Enter in Current DollarsAnnual Cash Expense After Buyout $1,921,840.00 Enter in Current DollarsSalvage as a % of Buyout 0.00%Expected Annual Inflation Rate 2.50%

Calculated Annual Lease Payment $ $1,338,659.36 Calculated Buyout Amount $410,250.00 Percent of Buyout Amount Financed 0.00%Term of Loan in Years After Buyout 5 Calculated Depreciable Basis After Buyout $410,250.00

Net Present Value of the Lease ($13,443,751.65)Tax Savings Present Present Present

Annual Annual Tax Adjusted Present Annual From Depr. Value of Present Value of Value of Inflated Inflated Loan Cash Lease Tax Savings After Tax Discount Value of Cash Annual Annual Annual Annual Cash Tax Savings Value of Annual Principle Cumulative Inflation Before After

Analysis Repayment Outflows From Lease Lease Factor After Tax Operating Depreciation Principle Interest Operating & From Depr. Buyout Cash & Interest Net Present Annual Analysis Adjustment Buyout BuyoutYear Year and Buyout Payment Payment 2.6250% Lease Payment Outflows Expense Payments Payment Interest Oper. & Int. Amount Operating Payments Value Equivalent Year Factor CashFlow Cash_Flow

0 0 1,338,659 334,665 1,003,995 1.00000 1,003,995 333,240 0 0 0 83,310 83,310 0 333,240 0 1,253,925 0 0 333,240 1,921,8401 0 1,338,659 334,665 1,003,995 0.97442 978,314 341,571 0 0 0 85,393 83,209 0 332,834 0 2,481,864 1 1.025 341,571 1,969,8862 0 1,338,659 334,665 1,003,995 0.94950 953,290 350,110 0 0 0 87,528 83,107 0 332,429 0 3,684,475 1,315,115 2 1.051 350,110 2,019,1333 0 1,338,659 334,665 1,003,995 0.92521 928,906 358,863 0 0 0 89,716 83,006 0 332,024 0 4,862,399 1,323,794 3 1.077 358,863 2,069,6114 0 1,338,659 334,665 1,003,995 0.90154 905,146 367,835 0 0 0 91,959 82,905 0 331,619 0 6,016,260 1,332,490 4 1.104 367,835 2,121,3525 1 410,250 0 0 0.87848 0 2,174,386 61,538 0 0 558,981 491,056 360,398 1,910,164 0 7,795,766 1,463,018 5 1.131 377,030 2,174,3866 2 0 0 0 0.85601 0 2,228,745 104,614 0 0 583,340 499,347 0 1,907,838 0 9,204,257 1,505,306 6 1.160 386,456 2,228,7457 3 0 0 0 0.83412 0 2,284,464 73,230 0 0 589,423 491,649 0 1,905,514 0 10,618,122 1,544,689 7 1.189 396,118 2,284,4648 4 0 0 0 0.81278 0 2,341,575 68,348 0 0 602,481 489,686 0 1,903,193 0 12,031,628 1,581,509 8 1.218 406,021 2,341,5759 5 0 0 0 0.79199 0 2,400,115 68,348 0 0 617,116 488,751 0 1,900,875 0 13,443,752 1,616,495 9 1.249 416,171 2,400,11510 6 0 0 0 0.77174 0 0 0 0 0 0 0 0 0 0 0 0 10 1.280 426,575 2,460,11811 7 0 0 0 0.75200 0 0 0 0 0 0 0 0 0 0 0 0 11 1.312 437,240 2,521,62112 8 0 0 0 0.73276 0 0 0 0 0 0 0 0 0 0 0 0 12 1.345 448,171 2,584,66113 9 0 0 0 0.71402 0 0 0 0 0 0 0 0 0 0 0 0 13 1.379 459,375 2,649,27814 10 0 0 0 0.69575 0 0 0 0 0 0 0 0 0 0 0 0 14 1.413 470,859 2,715,51015 11 0 0 0 0.67796 0 0 0 0 0 0 0 0 0 0 0 0 15 1.448 482,631 2,783,397

4,769,650 13,180,904 376,076 0 0 3,389,245 2,876,026 360,398 11,189,729 0

Net Present Value Equals: PV of After Tax Lease Payments $4,769,650.42 Plus PV of Cash Buyout Amount $360,398.30 Plus PV of Annual Cash Operating Outflows $11,189,729.07 Plus PV of Principle and Interest Payments $0.00 Minus PV of Tax Savings From Dep. & Cash Operating ($2,876,026.14)Minus PV of Income From Salvage Value $0.00

Net Present Value of Lease ($13,443,752)

Rental/Custom ANALYSIS:Include annual rental fee and Operating costs incurred by renter Tax Adjustedin Current Dollars. Annual Annual Tax Savings After Tax Discount Cummulative

Rental Cash From Rents Cash Factor Net Present AnnualAnalysis Year Payment Operating Exp. Paid Outflows 2.6250% Value Equivalent

0 $0.00 $0.00 0.00 0.00 1.00000 - 1 $0.00 0.00 0.00 0.00 0.97442 - 2 $0.00 0.00 0.00 0.00 0.94950 - $0.00 3 $0.00 0.00 0.00 0.00 0.92521 - $0.00 4 $0.00 0.00 0.00 0.00 0.90154 - $0.00 5 $0.00 0.00 0.00 0.00 0.87848 - $0.00 6 $0.00 0.00 0.00 0.00 0.85601 - $0.00 7 $0.00 0.00 0.00 0.00 0.83412 - $0.00 8 $0.00 0.00 0.00 0.00 0.81278 - $0.00 9 $0.00 0.00 0.00 0.00 0.79199 - $0.00

10 $0.00 0.00 0.00 0.00 0.77174 - $0.00 11 $0.00 0.00 0.00 0.00 0.75200 - $0.00 12 $0.00 0.00 0.00 0.00 0.73276 - $0.00 13 $0.00 0.00 0.00 0.00 0.71402 - $0.00 14 $0.00 0.00 0.00 0.00 0.69575 - $0.00 15 $0.00 0.00 0.00 0.00 0.67796 - $0.00

E13

See table starting in column M, row 5. Group 1 is for Tractors Group 2-4 are for implements that lose value at different rates. Review the table for which group you want to select.

This template analyzes three options for accomplishing a task with machinery. Purchase, Lease, and Rental.

Items to be entered are outlined with a double lined box.

General Information Item to Purchase Pulled SwatherMarginal Tax Rate 21.00%Discount Rate 5.00%Current market Value of Trade-in $ $0.00 Undepreciatied Value of Trade-in $ $0.00 Cost of Machine Sold or Traded $ $0.00 Sell or Trade (1 or 2) 1 Machinery Group Number (1-4) 3 Depreciation Class, 3, 5, or 7yr (3 , 5 or 7) 5 Capital Gains Tax Rate (% Gain Taxed) 0.00%Annual Cash Operating Expenses $1,120.00 Expected Annual Inflation Rate 3.00%PURCHASE INFORMATIONPurchase Price ($) $18,000.00 Amount to Finance ($) $15,000.00 Downpayment $3,000 Interest rate 7.00%Years to Finance Yrs 5 Number of Years for Analysis Yrs 15 Calculated Payment (Annual Payments Assumed) $3,658

Amount Expensed ($) $0.00 Investment Credit Taken 0%Investment Credit Applicable $0 Depreciable Basis $18,000 Estimated salvage Value $1,728

Tax Adjusted Discount Rate 3.95%

PURCHASEDepreciation

Downpayment and AnnualYear and Interest First Year Cash Operating

Principal Payment Expensing Expense0 3,000.00 2,700.00 1,120.00 1 2,608.36 1,050.00 4,590.00 1,153.60 2 2,790.95 867.41 3,213.00 1,188.21 3 2,986.31 672.05 2,998.80 1,223.85 4 3,195.35 463.01 2,998.80 1,260.57 5 3,419.03 239.33 1,499.40 1,298.39 6 0.00 0.00 0.00 1,337.34 7 0.00 0.00 0.00 1,377.46 8 0.00 0.00 1,418.78 9 0.00 0.00 1,461.35

10 0.00 0.00 1,505.19 11 0.00 0.00 1,550.34 12 0.00 0.00 1,596.85

E13


13 0.00 0.00 1,644.76 14 0.00 0.00 1,694.10 15 0.00 0.00 0.00

Total Depreciation Taken $18,000.00

Lease:Item for Lease Pulled SwatherPurchase or List Price of Lease Item $18,000.00 Lease Terms: Residual Value 30.00% Interest Rate 7.00% Term in Years 5 No Buyout = 1 Buyout = 2 2 Marginal Tax Rate 21.00%Discount Factor to be Used 5.00%Annual Cash Expense Befor Buyout $1,000.00 Annual Cash Expense After Buyout $1,500.00 Salvage as a % of Buyout 10.00%Expected Annual Inflation Rate 3.00%

Calculated Annual Lease Payment $ $3,073.02 Calculated Buyout Amount $5,400.00 Percent of Buyout Amount Financed 80.00%Term of Loan in Years After Buyout 5 Calculated Depreciable Basis After Buyout $4,860.00

Net Present Value of the Lease ($29,662.12)

AnnualLoan Annual Tax Savings After Tax

Analysis Repayment Cash Lease From Lease LeaseYear Year Outflows Payment Payment

0 0 3,073 645 2,4281 0 3,073 645 2,4282 0 3,073 645 2,4283 0 3,073 645 2,4284 0 3,073 645 2,4285 1 1,080 0 06 2 0 0 07 3 0 0 08 4 0 0 09 5 0 0 0

10 6 0 0 011 7 0 0 012 8 0 0 013 9 0 0 014 10 0 0 015 11 0 0 0

Net Present Value Equals: PV of After Tax Lease PaymentsPlus PV of Cash Buyout AmountPlus PV of Annual Cash Operating OutflowsPlus PV of Principle and Interest PaymentsMinus PV of Tax Savings From Dep. & Cash OperatingMinus PV of Income From Salvage Value

Net Present Value of Lease

Rental/Custom ANALYSIS:Include annual rental fee and Operating costs incurred by renter in Current Dollars. Annual Annual

Rental Cash Analysis Year Payment Operating Exp.

0 $0.00 $0.00 1 $0.00 0.00 2 $0.00 0.00 3 $0.00 0.00 4 $0.00 0.00 5 $0.00 0.00 6 $0.00 0.00 7 $0.00 0.00 8 $0.00 0.00 9 $0.00 0.00

10 $0.00 0.00 11 $0.00 0.00 12 $0.00 0.00 13 $0.00 0.00 14 $0.00 0.00 15 $0.00 0.00


And text is in Blue

This worksheet should only be used to calculateNet Present Values for capital items which Do Notgenerate a stream of income. The best alternative isthe one that has the smallest negative net present value.

06-May-23

(lease, purchase and rental/custom)

Tax AdjustedITC Net Discount & Tax After Tax Factor Present

Residual Credit Cash Outflow 3.9500% Value(802.20) 3,317.80 1.00000 3,317.80

0.00 (1,426.66) 3,385.30 0.96200 3,256.67 0.00 (1,106.41) 3,740.16 0.92545 3,461.31 0.00 (1,027.89) 3,854.33 0.89028 3,431.43 0.00 (991.70) 3,927.23 0.85645 3,363.48 0.00 (637.79) 4,318.95 0.82391 3,558.41 0.00 (280.84) 1,056.50 0.79260 837.38 0.00 (289.27) 1,088.19 0.76248 829.73 0.00 (297.94) 1,120.84 0.73351 822.14 0.00 (306.88) 1,154.46 0.70563 814.63 0.00 (316.09) 1,189.10 0.67882 807.18 0.00 (325.57) 1,224.77 0.65303 799.81 0.00 (335.34) 1,261.51 0.62821 792.50

0.00 (345.40) 1,299.36 0.60434 785.25 (1,728.12) 7.14 (26.87) 0.58138 (15.62)

0.00 0.00 0.00 0.55928 0.00 Net Present Value (After Tax) (26,862.09)

Enter as a Decimal Enter as a Decimal Whole Years Only

Enter as a Decimal

Enter in Current Dollars Enter in Current Dollars

Tax Adjusted Present AnnualDiscount Value of Cash Annual Annual

Factor After Tax Operating Depreciation Principle3.9500% Lease Payment Outflows Expense Payments1.00000 2,428 1,000 0 00.96200 2,335 1,030 0 00.92545 2,247 1,061 0 00.89028 2,161 1,093 0 00.85645 2,079 1,126 0 00.82391 0 1,739 729 -7510.79260 0 1,791 1,239 -8040.76248 0 1,845 868 -8600.73351 0 1,900 810 -9200.70563 0 1,957 810 -9850.67882 0 2,016 405 00.65303 0 2,076 0 00.62821 0 2,139 0 00.60434 0 2,203 0 00.58138 0 2,269 0 00.55928 0 0 0 0

11,250 25,244 4,860 -4,320

$11,250.33 $889.82

Plus PV of Annual Cash Operating Outflows $18,661.36 Plus PV of Principle and Interest Payments $4,022.81 Minus PV of Tax Savings From Dep. & Cash Operating ($4,848.26)

($313.94)Net Present Value of Lease ($29,662)

Tax AdjustedTax Savings After Tax Discount CummulativeFrom Rents Cash Factor Net Present Annual

Paid Outflows 3.9500% Value Equivalent0.00 0.00 1.00000 - 0.00 0.00 0.96200 - 0.00 0.00 0.92545 - $0.00 0.00 0.00 0.89028 - $0.00 0.00 0.00 0.85645 - $0.00 0.00 0.00 0.82391 - $0.00 0.00 0.00 0.79260 - $0.00 0.00 0.00 0.76248 - $0.00 0.00 0.00 0.73351 - $0.00 0.00 0.00 0.70563 - $0.00 0.00 0.00 0.67882 - $0.00 0.00 0.00 0.65303 - $0.00 0.00 0.00 0.62821 - $0.00 0.00 0.00 0.60434 - $0.00 0.00 0.00 0.58138 - $0.00 0.00 0.00 0.55928 - $0.00

REMAINING VALUE OF INVESTMENT

Beginning Tractor Impl't Impl'tYear Group Group Group

1 2 3 1 100.0% 100.0% 100.0%2 62.5% 56.6% 53.1%3 57.5% 50.1% 47.0%4 52.8% 44.4% 41.6%5 48.7% 39.3% 36.8%6 44.8% 34.7% 32.6%7 41.2% 30.7% 28.8%8 37.9% 27.2% 25.5%9 34.8% 24.1% 22.6%

10 32.1% 21.3% 20.0%11 29.4% 18.9% 17.7%12 27.0% 16.7% 15.6%

1994 Depreciation for Machinery and Equipment150% Declining Balance Method

Year 3-Year 5-Year 7-year0 3 5 7 1 25.00% 15.00% 10.71%2 37.50% 25.50% 19.13%3 25.00% 17.85% 15.03%4 12.50% 16.66% 12.25%5 16.66% 12.25%6 8.33% 12.25%7 12.25%8 6.13%

Cummulative The depreciation schedules shown above can beNet Present Annual changed at any time to update this program to reflect

Value Equivalent changes in tax laws or depreciation methods. 3,317.80 If you change the table, you MUST leave the shaded 6,574.47 line with 0, 3, 5, and 7 indicating the class 10,035.78 $3,685.22 life of depreciation or replace it with something similar. 13,467.21 $3,797.91 If the years (class life) do not change, simply 16,830.69 $3,887.46 enter the new depreciation rates under the 20,389.10 $4,017.01 appropriate class life. 21,226.47 $3,668.36 22,056.20 $3,412.58 22,878.34 $3,218.76 23,692.97 $3,068.35 24,500.15 $2,949.55 25,299.96 $2,854.48 26,092.46 $2,777.69

26,877.71 $2,715.29 26,862.09 $2,587.96 - $0.00

Tax Savings Present Present PresentFrom Depr. Value of Present Value of Value of

Annual Annual Cash Tax Savings Value of Annual PrincipleInterest Operating & From Depr. Buyout Cash & InterestPayment Interest Oper. & Int. Amount Operating Payments

0 210 210 0 1,000 00 216 208 0 991 00 223 206 0 982 00 229 204 0 973 00 236 202 0 964 0

-302 582 479 890 1,433 -868-250 689 546 0 1,420 -835-194 610 465 0 1,407 -803-133 597 438 0 1,394 -773-69 596 420 0 1,381 -7430 508 345 0 1,368 00 436 285 0 1,356 00 449 282 0 1,344 00 463 280 0 1,331 00 476 277 0 1,319 00 0 0 0 0 0

-948 6,521 4,848 890 18,661 -4,023


Impl'tGroup

4 100.0%

49.6%43.9%38.8%34.4%30.4%26.9%23.8%21.1%18.6%16.5%14.6%

The depreciation schedules shown above can bechanged at any time to update this program to reflectchanges in tax laws or depreciation methods.If you change the table, you MUST leave the shadedline with 0, 3, 5, and 7 indicating the classlife of depreciation or replace it with something similar.If the years (class life) do not change, simplyenter the new depreciation rates under the

Cumulative Net Present Annual

Value Equivalent3,2186,3369,358 3,436

12,288 3,46515,129 3,49417,840 3,51519,549 3,37821,293 3,29523,022 3,23924,726 3,20225,750 3,10026,821 3,02627,882 2,96828,934 2,92329,662 2,858

0 0

$10,800

$1,728

$0

############

0 #########

$0

Inflated Inflated Inflation Before After

Analysis Adjustment Buyout BuyoutYear Factor CashFlow Cash_Flow

0 0 1,000 1,5001 1.030 1,030 1,5452 1.061 1,061 1,5913 1.093 1,093 1,6394 1.126 1,126 1,6885 1.159 1,159 1,7396 1.194 1,194 1,7917 1.230 1,230 1,8458 1.267 1,267 1,9009 1.305 1,305 1,957

10 1.344 1,344 2,01611 1.384 1,384 2,07612 1.426 1,426 2,13913 1.469 1,469 2,20314 1.513 1,513 2,26915 1.558 1,558 2,337



General Information Item to Purchase Tractor 85 hpMarginal Tax Rate 21.00%Discount Rate 5.00%Current market Value of Trade-in $ $0.00 Undepreciatied Value of Trade-in $ $0.00 Cost of Machine Sold or Traded $ $0.00 Sell or Trade (1 or 2) 1 Machinery Group Number (1-4) 1 Depreciation Class, 3, 5, or 7yr (3 , 5 or 7) 5 Capital Gains Tax Rate (% Gain Taxed) 0.00%Annual Cash Operating Expenses $7,100.00 Expected Annual Inflation Rate 3.00%PURCHASE INFORMATIONPurchase Price ($) $57,500.00 Amount to Finance ($) $50,000.00 Downpayment $7,500 Interest rate 7.00%Years to Finance Yrs 5 Number of Years for Analysis Yrs 15 Calculated Payment (Annual Payments Assumed) $12,195





Principal Payment Expensing Expense0 7,500.00 8,625.00 7,100.00 1 8,694.53 3,500.00 14,662.50 7,313.00 2 9,303.15 2,891.38 10,263.75 7,532.39 3 9,954.37 2,240.16 9,579.50 7,758.36 4 10,651.18 1,543.36 9,579.50 7,991.11 5 11,396.76 797.77 4,789.75 8,230.85 6 0.00 0.00 0.00 8,477.77 7 0.00 0.00 0.00 8,732.10 8 0.00 0.00 8,994.07 9 0.00 0.00 9,263.89

10 0.00 0.00 9,541.81 11 0.00 0.00 9,828.06 12 0.00 0.00 10,122.90

E13


13 0.00 0.00 10,426.59 14 0.00 0.00 10,739.39 15 0.00 0.00 0.00


Lease:Item for Lease Tractor 85 hpPurchase or List Price of Lease Item $57,500.00 Lease Terms: Residual Value 30.00% Interest Rate 7.00% Term in Years 5 No Buyout = 1 Buyout = 2 2 Marginal Tax Rate 21.00%Discount Factor to be Used 5.00%Annual Cash Expense Befor Buyout $6,500.00 Annual Cash Expense After Buyout $8,000.00 Salvage as a % of Buyout 10.00%Expected Annual Inflation Rate 3.00%





0 0 9,817 2,061 7,7551 0 9,817 2,061 7,7552 0 9,817 2,061 7,7553 0 9,817 2,061 7,7554 0 9,817 2,061 7,7555 1 3,450 0 06 2 0 0 07 3 0 0 08 4 0 0 09 5 0 0 0

10 6 0 0 011 7 0 0 012 8 0 0 013 9 0 0 014 10 0 0 015 11 0 0 0





0 $0.00 $0.00 1 $0.00 0.00 2 $0.00 0.00 3 $0.00 0.00 4 $0.00 0.00 5 $0.00 0.00 6 $0.00 0.00 7 $0.00 0.00 8 $0.00 0.00 9 $0.00 0.00

10 $0.00 0.00 11 $0.00 0.00 12 $0.00 0.00 13 $0.00 0.00 14 $0.00 0.00 15 $0.00 0.00


And text is in Blue


06-May-23



Residual Credit Cash Outflow 3.9500% Value(3,302.25) 11,297.75 1.00000 11,297.75

0.00 (5,349.86) 14,157.68 0.96200 13,619.70 0.00 (4,344.38) 15,382.54 0.92545 14,235.71 0.00 (4,111.38) 15,841.51 0.89028 14,103.38 0.00 (4,013.93) 16,171.71 0.85645 13,850.26 0.00 (2,901.86) 17,523.52 0.82391 14,437.73 0.00 (1,780.33) 6,697.44 0.79260 5,308.38 0.00 (1,833.74) 6,898.36 0.76248 5,259.86 0.00 (1,888.75) 7,105.31 0.73351 5,211.79 0.00 (1,945.42) 7,318.47 0.70563 5,164.16 0.00 (2,003.78) 7,538.03 0.67882 5,116.97 0.00 (2,063.89) 7,764.17 0.65303 5,070.20 0.00 (2,125.81) 7,997.09 0.62821 5,023.87

0.00 (2,189.58) 8,237.01 0.60434 4,977.95 (11,194.23) 95.52 (359.32) 0.58138 (208.90)

0.00 0.00 0.00 0.55928 0.00 Net Present Value (After Tax) (122,468.83)


Enter as a Decimal



Factor After Tax Operating Depreciation Principle3.9500% Lease Payment Outflows Expense Payments1.00000 7,755 6,500 0 00.96200 7,460 6,695 0 00.92545 7,177 6,896 0 00.89028 6,904 7,103 0 00.85645 6,642 7,316 0 00.82391 0 9,274 2,329 -2,4000.79260 0 9,552 3,959 -2,5680.76248 0 9,839 2,771 -2,7470.73351 0 10,134 2,586 -2,9400.70563 0 10,438 2,586 -3,1460.67882 0 10,751 1,293 00.65303 0 11,074 0 00.62821 0 11,406 0 00.60434 0 11,748 0 00.58138 0 12,101 0 00.55928 0 0 0 0

35,939 140,828 15,525 -13,800

$35,938.57 $2,842.47


($1,002.87)Net Present Value of Lease ($130,811)





1 2 3 1 100.0% 100.0% 100.0%2 62.5% 56.6% 53.1%3 57.5% 50.1% 47.0%4 52.8% 44.4% 41.6%5 48.7% 39.3% 36.8%6 44.8% 34.7% 32.6%7 41.2% 30.7% 28.8%8 37.9% 27.2% 25.5%9 34.8% 24.1% 22.6%

10 32.1% 21.3% 20.0%11 29.4% 18.9% 17.7%12 27.0% 16.7% 15.6%




Value Equivalent changes in tax laws or depreciation methods. 11,297.75 If you change the table, you MUST leave the shaded 24,917.45 line with 0, 3, 5, and 7 indicating the class 39,153.16 $14,377.38 life of depreciation or replace it with something similar. 53,256.54 $15,018.97 If the years (class life) do not change, simply 67,106.81 $15,499.98 enter the new depreciation rates under the 81,544.54 $16,065.70 appropriate class life. 86,852.92 $15,009.91 92,112.78 $14,251.86 97,324.57 $13,692.60 102,488.74 $13,272.76 107,605.71 $12,954.53 112,675.91 $12,712.71 117,699.78 $12,529.82

122,677.73 $12,393.39 122,468.83 $11,798.93 - $0.00



0 1,365 1,365 0 6,500 00 1,406 1,353 0 6,441 00 1,448 1,340 0 6,382 00 1,492 1,328 0 6,323 00 1,536 1,316 0 6,266 0

-966 2,639 2,175 2,842 7,641 -2,773-798 3,005 2,382 0 7,571 -2,668-618 2,778 2,118 0 7,502 -2,566-426 2,761 2,025 0 7,433 -2,469-220 2,781 1,963 0 7,366 -2,375

0 2,529 1,717 0 7,298 00 2,326 1,519 0 7,232 00 2,395 1,505 0 7,165 00 2,467 1,491 0 7,100 00 2,541 1,477 0 7,035 00 0 0 0 0 0

-3,028 33,470 25,072 2,842 105,255 -12,851


Impl'tGroup

4 100.0%

49.6%43.9%38.8%34.4%30.4%26.9%23.8%21.1%18.6%16.5%14.6%



Value Equivalent12,89025,43937,657 13,82849,557 13,97661,149 14,12472,230 14,23180,088 13,84188,038 13,62195,915 13,494

103,693 13,429109,274 13,155114,987 12,973120,648 12,844126,257 12,755130,811 12,603

0 0

$39,100

$11,194

$0

############

0 #########

$0



0 0 6,500 8,0001 1.030 6,695 8,2402 1.061 6,896 8,4873 1.093 7,103 8,7424 1.126 7,316 9,0045 1.159 7,535 9,2746 1.194 7,761 9,5527 1.230 7,994 9,8398 1.267 8,234 10,1349 1.305 8,481 10,438

10 1.344 8,735 10,75111 1.384 8,998 11,07412 1.426 9,267 11,40613 1.469 9,545 11,74814 1.513 9,832 12,10115 1.558 10,127 12,464



General Information Item to Purchase Tractor 105 hpMarginal Tax Rate 21.00%Discount Rate 5.00%Current market Value of Trade-in $ $0.00 Undepreciatied Value of Trade-in $ $0.00 Cost of Machine Sold or Traded $ $0.00 Sell or Trade (1 or 2) 1 Machinery Group Number (1-4) 1 Depreciation Class, 3, 5, or 7yr (3 , 5 or 7) 7 Capital Gains Tax Rate (% Gain Taxed) 0.00%Annual Cash Operating Expenses $7,050.00 Expected Annual Inflation Rate 3.00%PURCHASE INFORMATIONPurchase Price ($) $65,000.00 Amount to Finance ($) $55,000.00 Downpayment $10,000 Interest rate 7.00%Years to Finance Yrs 5 Number of Years for Analysis Yrs 12 Calculated Payment (Annual Payments Assumed) $13,414





Principal Payment Expensing Expense0 10,000.00 6,961.50 7,050.00 1 9,563.99 3,850.00 12,434.50 7,261.50 2 10,233.47 3,180.52 9,769.50 7,479.35 3 10,949.81 2,464.18 7,962.50 7,703.73 4 11,716.30 1,697.69 7,962.50 7,934.84 5 12,536.44 877.55 7,962.50 8,172.88 6 0.00 0.00 7,962.50 8,418.07 7 0.00 0.00 3,984.50 8,670.61 8 0.00 0.00 8,930.73 9 0.00 0.00 9,198.65

10 0.00 0.00 9,474.61 11 0.00 0.00 9,758.85 12 0.00 0.00 0.00

E13


13 0.00 0.00 0.00 14 0.00 0.00 0.00 15 0.00 0.00 0.00


Lease:Item for Lease Tractor 105 hpPurchase or List Price of Lease Item $65,000.00 Lease Terms: Residual Value 30.00% Interest Rate 7.00% Term in Years 5 No Buyout = 1 Buyout = 2 2 Marginal Tax Rate 21.00%Discount Factor to be Used 5.00%Annual Cash Expense Befor Buyout $6,500.00 Annual Cash Expense After Buyout $8,000.00 Salvage as a % of Buyout 10.00%Expected Annual Inflation Rate 3.00%





0 0 11,097 2,330 8,7671 0 11,097 2,330 8,7672 0 11,097 2,330 8,7673 0 11,097 2,330 8,7674 0 11,097 2,330 8,7675 1 3,900 0 06 2 0 0 07 3 0 0 08 4 0 0 09 5 0 0 0

10 6 0 0 011 7 0 0 012 8 0 0 013 9 0 0 014 10 0 0 015 11 0 0 0





0 $0.00 $0.00 1 $0.00 0.00 2 $0.00 0.00 3 $0.00 0.00 4 $0.00 0.00 5 $0.00 0.00 6 $0.00 0.00 7 $0.00 0.00 8 $0.00 0.00 9 $0.00 0.00

10 $0.00 0.00 11 $0.00 0.00 12 $0.00 0.00 13 $0.00 0.00 14 $0.00 0.00 15 $0.00 0.00


And text is in Blue


06-May-23



Residual Credit Cash Outflow 3.9500% Value(2,942.42) 14,107.59 1.00000 14,107.59

0.00 (4,944.66) 15,730.83 0.96200 15,133.07 0.00 (4,290.17) 16,603.17 0.92545 15,365.33 0.00 (3,807.38) 17,310.33 0.89028 15,411.04 0.00 (3,694.96) 17,653.87 0.85645 15,119.66 0.00 (3,572.72) 18,014.15 0.82391 14,841.97 0.00 (3,439.92) 4,978.15 0.79260 3,945.67 0.00 (2,657.57) 6,013.04 0.76248 4,584.82 0.00 (1,875.45) 7,055.28 0.73351 5,175.09 0.00 (1,931.72) 7,266.93 0.70563 5,127.80 0.00 (1,989.67) 7,484.94 0.67882 5,080.93

(16,250.85) 1,363.32 (5,128.68) 0.65303 (3,349.16)0.00 0.00 0.00 0.62821 0.00

0.00 0.00 0.00 0.60434 0.00 0.00 0.00 0.00 0.58138 0.00 0.00 0.00 0.00 0.55928 0.00

Net Present Value (After Tax) (110,543.80)


Enter as a Decimal



Factor After Tax Operating Depreciation Principle3.9500% Lease Payment Outflows Expense Payments1.00000 8,767 6,500 0 00.96200 8,434 6,695 0 00.92545 8,113 6,896 0 00.89028 7,805 7,103 0 00.85645 7,508 7,316 0 00.82391 0 9,274 1,880 -2,7130.79260 0 9,552 3,357 -2,9030.76248 0 9,839 2,638 -3,1060.73351 0 10,134 2,150 -3,3230.70563 0 10,438 2,150 -3,5560.67882 0 10,751 2,150 00.65303 0 11,074 2,150 00.62821 0 0 0 00.60434 0 0 0 00.58138 0 0 0 00.55928 0 0 0 0

40,626 105,573 16,474 -15,600

$40,626.21 $3,213.23


($1,273.40)Net Present Value of Lease ($120,297)





1 2 3 1 100.0% 100.0% 100.0%2 62.5% 56.6% 53.1%3 57.5% 50.1% 47.0%4 52.8% 44.4% 41.6%5 48.7% 39.3% 36.8%6 44.8% 34.7% 32.6%7 41.2% 30.7% 28.8%8 37.9% 27.2% 25.5%9 34.8% 24.1% 22.6%

10 32.1% 21.3% 20.0%11 29.4% 18.9% 17.7%12 27.0% 16.7% 15.6%




Value Equivalent changes in tax laws or depreciation methods. 14,107.59 If you change the table, you MUST leave the shaded 29,240.66 line with 0, 3, 5, and 7 indicating the class 44,605.99 $16,379.70 life of depreciation or replace it with something similar. 60,017.02 $16,925.51 If the years (class life) do not change, simply 75,136.68 $17,354.68 enter the new depreciation rates under the 89,978.65 $17,727.37 appropriate class life. 93,924.32 $16,231.98 98,509.14 $15,241.51 103,684.23 $14,587.34 108,812.03 $14,091.66 113,892.96 $13,711.45 110,543.80 $12,472.15 - $0.00

- $0.00 - $0.00 - $0.00



0 1,365 1,365 0 6,500 00 1,406 1,353 0 6,441 00 1,448 1,340 0 6,382 00 1,492 1,328 0 6,323 00 1,536 1,316 0 6,266 0

-1,092 2,572 2,119 3,213 7,641 -3,135-902 2,900 2,299 0 7,571 -3,016-699 2,767 2,110 0 7,502 -2,901-482 2,681 1,966 0 7,433 -2,791-249 2,696 1,902 0 7,366 -2,685

0 2,709 1,839 0 7,298 00 2,777 1,813 0 7,232 00 0 0 0 0 00 0 0 0 0 00 0 0 0 0 00 0 0 0 0 0

-3,423 26,349 20,750 3,213 83,954 -14,527


Impl'tGroup

4 100.0%

49.6%43.9%38.8%34.4%30.4%26.9%23.8%21.1%18.6%16.5%14.6%



Value Equivalent13,90227,42340,578 14,90153,378 15,05365,836 15,20777,706 15,31085,994 14,86294,288 14,588

102,546 14,427110,694 14,335116,153 13,983120,297 13,573

0 00 00 00 0

$44,200

$16,251

$0

############

0 #########

$0



0 0 6,500 8,0001 1.030 6,695 8,2402 1.061 6,896 8,4873 1.093 7,103 8,7424 1.126 7,316 9,0045 1.159 7,535 9,2746 1.194 7,761 9,5527 1.230 7,994 9,8398 1.267 8,234 10,1349 1.305 8,481 10,438

10 1.344 8,735 10,75111 1.384 8,998 11,07412 1.426 9,267 11,40613 1.469 9,545 11,74814 1.513 9,832 12,10115 1.558 10,127 12,464

Graph-LeasePurchase #1 Combine Graph-LeasePurchase #3 Tractor 85 hp

Graph-LeasePurchase #2 Pulled Swather Graph-LeasePurchase #4 Tractor 105 hp

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000 Annual Equivalents For Each Year of Analysis

Purchase Lease Custom/RentalYears in Analysis

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500 Annual Equivalents For Each Year of Analysis

Purchase Lease Custom/Rental Years in Analysis

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16$0

$500,000

$1,000,000

$1,500,000

$2,000,000



1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16$0

$500,000

$1,000,000

$1,500,000

$2,000,000



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