00:01
Given to us, initial investment $4 ,40 ,000, number of years 5, lease payments $1 ,00 ,000, then tax rate to be 40%, before tax cost of debt is 10%, then after tax cost of debt is evaluated as before tax rate wherein we multiply it by 1 to which we subtract the tax rate.
01:20
So now putting in the values we get 10 % wherein we multiply it by 1 to which we subtract 40%, so we get it as 6%.
01:37
Then evaluating depreciation tax sheet, it is evaluated as initial investment divided by number of years which is then multiplied by tax rate.
02:15
So putting in the values $4 ,40 ,000 which is divided by 5 which is then multiplied by 40%.
02:28
So we get the value to be $35 ,200.
02:43
After tax, lease payment is then evaluated as lease payments multiplied by 1 to which we subtract the tax rate.
03:08
Putting in the values we get $1 ,00 ,000 which is multiplied by 1 to which we subtract 40%...