GRAPH
25a
e
h
m
Print_Area_MI
purchase CF*
========
*Net Owning CF – Net Leasing CF
PV cost of leasing =
Net Advantage to Leasing:
Net
adv to
leasing (NAL)
PV cost of
leasing –
PV cost of owning
Lessee’s Equivalent Loan Rate (IRR) =
Alternative Format Lessee’s Analysis:
Amortization Table:
Total
Remaining
Payment
Interest
Principal
Balance
——-
———
=======
==========
Lessee’s Analysis:
Cost of Owning:
Loan payment
Int tax sav
PART B: Lessor’s Analysis:
Lease pmt tax
Lessor’s NPV =
Lessor’s IRR =
SENSITIVITY ANALYSIS:
Lease
NAL to
NPV to
Agro-chem
Lonestar
END
IMPORTANT NOTE TO INSTRUCTORS:
THIS IS A FULL VERSION OF THE MODEL WITH ALL FORMULAS COMPLETED AND FIXED
INPUTS FOR A GRAPH OF THE IMPACT OF LEASE PAYMENTS ON NAL AND NPV.
VERSIONS OF STUDENT MODELS ARE AVAILABLE IN WHICH FORMULAS HAVE BEEN DELETED
TO PROVIDE STUDENT EXPERIENCE WITH SPREADSHEETS.
ALTERNATIVELY, THE INSTRUCTOR CAN MANUALLY DELETE CELLS
TO CREATE THEIR OWN STUDENT MODELS.
THE EASY MODEL (CASE-25AE.XLS) ERASES SOME OF THE MODEL-GENERATED DATA
CELLS, BUT THE MORE COMPLEX FORMULAS REMAIN IN THE MODEL. STUDENTS
SHOULD BE ABLE TO COMPLETE THE MODEL IN LESS THAN 30 MINUTES.
THE MEDIUM MODEL (CASE-25AM.XLS) ERASES SOME OF THE MODEL-GENERATED DATA
CELLS, INCLUDING SOME CELLS WITH MORE COMPLEX FORMULAS. STUDENTS SHOULD
BE ABLE TO COMPLETE THE MODEL IN LESS THAN ONE HOUR.
THE HARD MODEL (CASE-25AH.XLS) ERASES ALL OF THE MODEL EXCEPT THE INPUT
DATA LABELS AND RULES. IT WILL TAKE SEVERAL HOURS TO COMPLETE THE MODEL.
Case 49I
Instructor Model
6/01/95
AGRO-CHEM, INC.
Lease Analysis
This case illustrates the lease-versus-purchase decision from
the standpoints of both the lessee and lessor.
The model calculates the NAL (NPV) and IRR of the lease for both
the lessee and the lessor. Note that the lessee’s model is
presented in two equivalent formats–a time line format…