【正文】 2023 by The McGrawHill Companies, Inc. All rights reserved. 2128 Appendix 21A: APV Approach to Leasing APV = AllEquity Value + Financing NPV ? To find the allequity value, discount the cash flows at the pretax interest rate. The after tax rate was 5% which implies a pretax rate of % = 5%/(). $)066 ( 900,5$000,25$ueequ ity valAll 51??? ??t tCash Flows ClumZee Movers: Leasing Instead of Buying Year 0 Years 15 Cost of truck we didn’t buy $25,000 Lost Depreciation Tax Shield 5,000 (.25) = –$1,250 AfterTax Lease Payments 6,200 (1 –.25) = –$4,650 $25,000 –$5,900 McGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved. 2112 The Cash Flows of Leasing ? Cash Flows: Buy Year 0 Years 15 Cost of truck –$25,000 Aftertax savings 4,500 () = $2,970 Depreciation Tax Shield 5,000 (.34) = $1,700 –$25,000 $4,670 ? Cash Flows: Lease Year 0 Years 15 Lease Payments –6,250 () = –$4,125 Aftertax savings 4,500 () = $2,970 –$1,155 ? Cash Flows: Leasing Instead of Buying Year 0 Years 15 $25,000 –$1,155 – $4,670 = –$5,825 McGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved. 211 Types of Leases ? The Basics – A lease is a contractual agreement between a lessee and lessor. – The lessor owns the asset and for a fee allows the lessee to use the asset. McGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved. 2117 Debt Displacement and Lease Valuation ? Considering the issues of debt displacement allows for a more intuitive understanding of the lease versus buy decision. ? Leases displace debt—this is a hidden cost of leasing. If a firm leases, it will not use as much regular debt as it would otherwise. – The interest tax shield will be lost. McGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved. 2133 Appendix 21A: APV Approach to Leasing APV = AllEquity Value + Financing NPV ? To find the allequity value, discount the cash flows at the pretax interest rate. The after tax rate was 5% which implies a pretax rate of % = 5%/(). $)066 ( 900,5$000,25$ueequ ity valAll 51??? ??t tCash Flows ClumZee Movers: Leasing Instead of Buying Year 0 Years 15 Cost of truck we didn’t buy $25,000 Lost Depreciation Tax Shield 5,000 (.25) = –$1,250 AfterTax Lease Payments 6,200 (1 –.25) = –$4,650 $25,000 –$5,900 McGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved. 2123 Reservations and Negotiations ? What is the smallest lease payment that Tiger Leasing will accept? Set their NPV to zero and solve for $Lmin: ? Cash Flows: Tiger Leasing Year 0 Years 15 Cost of truck $25,000 Depreciation Tax Shield 5,000 (.34) = $1,700 Lease Payments $Lmin (1 –.34) = $Lmin .66 $25,000 $1,700 + $Lmin .66 ?? ?????? 5 1 m in )( 700,1$,25$0 t tLNPV ??????? 5151m in )(700,1$)(1$,25$t tt tL??????? 5151m in)(1$66.)(700,1$000,25$ttttL,6$m in ?LMcGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved. 217 Accounting and Leasing Balance Sheet Truck is purchased with debt Truck $100,000 Debt $100,000 Land $100,000 Equity $100,000 Total Assets $200,000 Total Debt Equity $200,000 Operating Lease Truck Debt Land $100,000 Equity $100,000 Total Assets $100,000 Total Debt Equity $100,000 Capital Lease Assets leased $100,000 Obligations under capital lease $100,000 Land $100,000 Equity $100,000 Total Assets $200,000 Total Debt Equity $200,000 McGrawHill/Irwin Copyright 169。 2023 by The McGrawHill Companies, Inc. All rights reserved. 216 Accounting and Leasing ? In the old days, leases led to offbalancesheet financing. ? Today, leases are either classified as capital leases or operating leases. ? Operating leases do no