Equipment Lease Analyser

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Equipment Lease Analyser Powered By Docstoc
					                             Equipment Lease Analyser                                                     ver 1.0


Equipment Details
Cost of Equipment                                $ 120,000
Sale Price at end of loan period                 $ 50,000
CCA Rate                                               30%
Tax Rate                                               28%
Discount Rate                                           5%

Lease Payments
Residual Value                                   $     50,000
Number of payments per year                                  1
Term of Lease                                                5
Interest Factor or rate                                  6.0%
Lease Payment                                    $     18,507
If you know your lease payments enter them here
If you want to use the calculator after all just hit reset button

Loan Payments
Down payment                                     $     25,000
Amount of loan                                   $     95,000
Annual Interest Rate                                     6.0%
Length of Loan                                               5
Number of payments per year                                  1
Compounding periods per year                                12
Payment per year                                 $     22,656
If you know your loan and interest payments enter them in table below
To use calculator after entering pmts hit the reset button



Comparison - After Tax Cash Outflow (without discounting)
                                                      Lease            Buy       Difference   Advantage
Payments                                         $      92,537      $ 138,278    $ (45,742)    Lease
Tax Benefit                                      $      25,910      $ 31,861     $ (5,950)      Buy
After Tax Cash Outflow - sale at: $     50,000   $      66,626      $ 56,418     $ 10,209       Buy
Comparison - After Tax Net Present Value Cash Flows
Net Present Value                                 $     60,576      $   55,836   $   4,740      Buy
Net Present Value (recapture or term. loss incl.) $     60,576      $   61,433   $    (857)    Lease

Depreciation remaining         $        24,490   $         -        $    6,857
                     Recapture $        25,510




                                                           Page 1
                                                                   Lease
                                                                     CCA
                                                                                               After Tax
          Year                                  Capital           (only on a        Tax                           Discount        Net Present
Yr                          Payments                                                             Cash
     *see note below                           Expense         purchase at end   Deduction                         Factor           Value
                                                                                               Outflow
                                                                   of lease)
 0        2009         $        18,507                                           $    5,182 $      13,325             1.000       $      13,325
 1        2010         $        18,507                                           $    5,182 $      13,325             0.9524 $           12,691
 2        2011         $        18,507                                           $    5,182 $      13,325             0.9070 $           12,086
 3        2012         $        18,507                                           $    5,182 $      13,325             0.8638 $           11,511
 4        2013         $        18,507                                           $    5,182 $      13,325             0.8227 $           10,963
 5        2014         $               -                                         $         -   $          -           0.7835 $               -
 6        2015         $               -                                         $         -   $          -           0.7462 $               -
 7        2016         $               -                                         $         -   $          -           0.7107 $               -
 8        2017         $               -                                         $         -   $          -           0.6768 $               -
 9        2018         $               -                                         $         -   $          -           0.6446 $               -
10        2019         $               -                                         $         -   $          -           0.6139 $               -
     Purchase                              $          -        $           -
         Totals        $        92,537     $               -   $           -     $    25,910 $     66,626                         $      60,576
            Remaining CCA
        Compare        $       (45,742)                                          $   (5,950) $ 10,209                             $      4,740
     Note * - Year 0 represents the beginning of the year. Lease payment are required in advance so a payment shows
     in year 0 but not in year 5 since the years 1-5 represent the year end.


                                                                            Buy
                                                               Undepreciated                                      After Tax
          Year                                                                                    Tax                                 Discount    Net Present
Yr                          Payments           Interest         Capital Cost         CCA
                                                                                               Deduction
                                                                                                                    Cash
                                                                                                                                       Factor       Value
     *see note below                                              (UCC)                                           Outflow
 0        2009          $       25,000                                                                        $       25,000              1.0000 $    25,000
 1        2010         $        22,656     $        5,859      $     120,000     $    18,000 $      6,681 $          15,975               0.9524 $    15,214
 2        2011         $        22,656     $        4,823      $     102,000     $    30,600 $      9,919 $          12,737               0.9070 $    11,553
 3        2012         $        22,656     $        3,724      $      71,400     $    21,420 $      7,040 $          15,615               0.8638 $    13,489
 4        2013         $        22,656     $        2,556      $      49,980     $    14,994 $      4,914 $          17,742               0.8227 $    14,596
 5        2014         $        22,656     $        1,316      $      34,986     $    10,496 $      3,307 $          19,348               0.7835 $    15,160
 6        2015         $               0                  0.00 $           -     $         -   $          -   $               0           0.7462 $        0
 7        2016         $               -   $               -   $           -     $         -   $          -   $           -               0.7107 $        -
 8        2017         $               -   $               -   $           -     $         -   $          -   $           -               0.6768 $        -
 9        2018         $               -   $               -   $           -     $         -   $          -   $           -               0.6446 $        -
10        2019         $               -   $               -   $           -     $         -   $          -   $           -               0.6139 $        -
                       Assume no recapture or Terminal loss on sale
          Sale                                                 $      50,000     $   (25,510) $       -       $      (50,000)             0.7835 $ (39,176)
         Totals        $       138,278 $           18,278                        $    70,000 $     31,861 $          56,418                       $   55,836
     Remaining Depreciation                      $      24,490
                         Below is the calculation if there was full recapture or terminal loss on sale
                                                               $      50,000     $   (25,510) $    (7,143) $         (42,857)             0.7835 $ (33,580)
                                                                                                              $       38,560                      $   61,433
     Note * - Year 0 represents the beginning of the year. Lease payment are required in advance so a payment shows in year 0 but
     not in year 5 since the years 1-5 represent the year end.




                                                                         Page 2
Best Hourly Option For a Lease


This sheet allows you to quickly determine the best annual hour selection to choose when considering an
equipment lease. Acquire the appropriate information from your dealer and enter it into the yellow cells.

                                         Lease 1           Lease 2
Contract hours per year                      400               600
Annual Payment                           $15,000           $16,500
Charge for extra hours per hp                              $0.1067
Equipment Horsepower                                           225
Breakeven Hours                                               462

Results
If you think you will use the equipment for less than 462 hours per year
the 400 hour lease is less expensive than the 600 lease.