Professional Documents
Culture Documents
Assumption: The depreciation benefit would be received by the lessor as the tenu
Rs in Lakhs
15
EMI Calculation
Loan Amount
Let the EMI for every year be Rs. X
PVIFA(5, 20%)
x
Discounting Factor
Cost of Capital
Tax rate
After tax cost of debt
2.991
5.015
501504.5
20%
35%
13.00%
Year
1
2
3
4
5
Depreciation Schedule
Initial
Depreciation
Value
Amount
Rate
W.D.V
25% 1500000
375000.00 1125000.00
25% 1125000
281250.00 843750.00
25%
843750
210937.50 632812.50
25% 632812.5
158203.13 474609.38
25% 474609.4
118652.34 355957.03
Scrap Value
100000
Capital Loss
255957.03
Tax Benefit for
Capital Loss
89584.9609
PVIF (13%,5)
0.543
PV(Tax Benefit for
Capital Loss)
PV(Benefit from
Scrap Value)
Loan Amortization Schedule
Value of
machine
Year
1
2
3
4
1500000.00
1298495.00
1056689.00
766521.80
EMI
501505.00
501505.00
501505.00
501505.00
Interest
300000.00
259699.00
211337.80
153304.36
48644.6338
54300
Principal
(EMI Interest)
201505.00
241806.00
290167.20
348200.64
Cash Outflow
Year
418321.16 501505.00
EMI
1
2
3
4
5
501505.00
501505.00
501505.00
501505.00
501505.00
83183.84
418321.16
Interest Benefit
Depreciation Benefit Cash Outflow
105000
131250 265255.00
90894.65
98437.5 312172.85
73968.23
73828.125 353708.65
53656.53
55371.09375 392477.38
29114.34
41528.32031 430862.34
1 lakh. Funding through loan interest would be 20% payable in 5 equal EMI. Lease rental of 450000 per year.
%. Assume maintainance of machine will require payment of Rs 30000 per year which will be paid by the lessee.
e better option of financing, leasing or loan.
e received by the lessor as the tenure of life of the machine is very low.
Balance Principal
1298495.00
1056689.00
766521.80
418321.16
83183.84
he
ng a loan.
0.00
PV @ 13%
0.885
0.783
0.693
0.613
0.543
Final Cash Outflow
67187.67
PV(Cash Outflow)
234738.94
244477.13
245137.83
240713.73
233854.81
1198922.45
1095977.81
110000
6.145 17900.73
Year
17900.73
Depreciatio
Initial
n
Value
Amount
Rate
W.D.V
1
25%
110000
27500.00
82500.00
2
25%
82500
3
4
5
25%
61875
25% 46406.25
25% 34804.69
20625.00
61875.00
15468.75
46406.25
11601.56
34804.69
8701.17
26103.52
Scrap Value
20000
capital gain
6103.52
tax benefit
3051.7578
pvif(6,10)
0.588
pv tax benf
5190.0643
pv benft srap 44393.734
emi
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
Loa
Year
1
2
3
4
5
6
7
8
9
10
110000.00
103099.27
95508.46
87158.58
77973.70
67870.34
56756.64
44531.57
31084.00
16291.67
EMI
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
17900.73
Interest
11000.00
10309.93
9550.85
8715.86
7797.37
6787.03
5675.66
4453.16
3108.40
1629.17