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Industry > US & World Business Conditions
2007 Machine Purchase
| Machine Price |
| Price of HSM 600 (avg - price) |
$460,000 |
Total amount financed - assume 0% down |
|
| Interest Rates - USBancorp rates (5 yr. loan) |
8.05% |
Feb. 2007 rate |
| |
Yr. 1 |
Yr. 2 |
Yr. 3 |
Yr. 4 |
Yr. 5 |
Total |
| Interest payments at 8.05% |
$34,199 |
$27,695 |
$20,647 |
$13,011 |
$4,737 |
$100,289 |
| Interest after tax deduction (34% tax rate) |
$22,571 |
$18,279 |
$13,627 |
$8,587 |
$3,126 |
|
| NPV factor - 8% |
0.926 |
0.857 |
0.794 |
0.735 |
0.681 |
|
| NPV - after tax interest exp. |
$20,901 |
$15,665 |
$10,820 |
$6,312 |
$2,129 |
$55,826 |
| Tax |
| 1st year deduction - |
|
|
|
|
|
|
| Old Law: Sec 179 Exp. - $128,000 |
$128,000 |
|
|
|
|
|
| 50% Bonus Deprec. - not allowed in 2007. |
$0 |
|
|
|
|
|
| Annual depreciation at 7 year rate - 14.286% |
$47,429 |
|
|
|
|
|
Total |
$175,429 |
|
|
|
|
|
| at 34% tax rate |
$59,646 |
|
|
|
|
|
| Deprec. Years 2 - 7 |
$47,429 |
|
|
|
|
|
| at 34% tax rate |
$16,126 |
|
|
|
|
|
| |
Yr. 1 |
Yr. 2 |
Yr. 3 |
Yr. 4 |
Yr. 5 |
Total |
| Tax savings on Sec. 179 exp. & deprec. |
$59,646 |
$16,126 |
$16,126 |
$16,126 |
$16,126 |
$124,149 |
| NPV factor - 8% |
0.926 |
0.857 |
0.794 |
0.735 |
0.681 |
|
| NPV - Tax Savings on depreciation |
$55,232 |
$13,820 |
$12,804 |
$11,853 |
$10,982 |
$104,690 |
|
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