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Lease Calculation:

Lease Calculation Lecture Prepared By N S Bohra Assistant professor Faculty of Management GEU

Slide 2:

Purchase Decision Rs in Lakhs SN Year 0 1 2 3 4 5 1 Investment (I) 50 0 0 0 0 0 2 Revenue (R) 60 60 60 60 60 3 Cost(C) 30 30 30 30 30 4 Depericiation (D) 16.7 11.1 7.41 4.94 3.3 5 PBT (R - C - D) 13.3 18.9 22.6 25.1 26.7 6 PAT (5-Tax) 6.67 9.45 11.3 12.5 13.4 7 Net Scrap Value 7.5 8 Net Cash Flow (1+4+6+7) 50 23.3 20.6 18.7 17.5 24.2 9 PV Factor @10% 1 0.91 0.83 0.75 0.68 0.62 10 PV of Cash Flow (8X9) 50 21.2 17 14 11.9 15 NPV (Purchase) = 29.166

Slide 3:

Lease Decision Rs in Lakhs SN Year 1 2 3 4 5 1 Revenue (R) 60 60 60 60 60 2 Cost(Other then depericiation) 30 30 30 30 30 3 Lease Rental (L) 7.5 7.5 7.5 7.5 7.5 4 PBT (R - C - L) 22.5 22.5 22.5 22.5 22.5 5 PAT (R - C - D) (1-T) 11.25 11.25 11.25 11.25 11.25 6 PV Interest Factor @ 14% 0.877 0.769 0.675 0.592 0.519 7 PV of Cash Flow (5X6) 9.866 8.651 7.594 6.66 5.839 NPV (Lease )= 38.61

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