HP 12c Platinum - Page 52

52 Investment Analysis
salvage value. An accountant informs management to take the 10% capital investment tax
credit at the end of the second year and to figure the cash flows at a 48% tax rate. The
after tax cost of capital (discounting rate) is 5 percent.
Because lease payments are made in advance and standard loan payments are made in
arrears the following cash flow schedule is appropriate for a lease with the last payment in
advance.
Year Maintenance Lease Payment Tax Credit Buy Back
0 1700+1700
1 200 1700
2 200 1700 1000
3 200 1700
4 200 1700
5 1500 1700
6 300 1700
7 300 1700
8 300 1700
9 300 0
10 300 0 750
12c platinum / 12C
RPN Keystrokes
12c platinum
ALG Keystrokes
Display Comments
g gÂ
fCLEARH fCLEARH
0.00
10n12¼ 10n12¼
10000Þ$ 10000Þ$
-10,000.00
Always use negative loan
amount.
P P
1,769.84
Purchase payment.
.48?3 .48?3
0.48
Marginal tax rate.
.05\1+?4 .05+1³?4
1.05
Discounting factor.
10000\ 10000-
1500-?5 1500³?5
8,500.00
Depreciable value.
10?6 10?6
10.00
Depreciable life.
1700\+ 1700+³
3,400.00
1st lease payment.
1:3-§?2 1-:3§~
³?2
1,768.00
After-tax expense.
200\ 200³
1700t 1700t
312.36
Present value of 1st year's
net purchase.
200\ 200³
1700t 1700t
200.43
2nd year's advantage.
1000g(043 1000g(036
1,000.00
Tax credit.
t t
907.03
Present value of tax credit.
200\ 200³
1700t 1700t
95.05
3rd year.
200\ 200³
1700t 1700t
-4.38
4th year.