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Industry > US & World Business Conditions
2008 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) |
6.6% |
Feb. 2008 rate |
| |
Yr. 1 |
Yr. 2 |
Yr. 3 |
Yr. 4 |
Yr. 5 |
Total |
| Interest payments at 6.6% |
$27,960 |
$22,496 |
$16,661 |
$10,429 |
$3,773 |
$81,319 |
| Interest after tax deduction (34% tax rate) |
$18,454 |
$14,847 |
$10,996 |
$6,883 |
$2,490 |
|
| NPV factor - 7% |
0.935 |
0.873 |
0.816 |
0.763 |
0.713 |
|
| NPV - after tax interest exp. |
$17,254 |
$12,962 |
$8,973 |
$5,252 |
$1,775 |
$46,216 |
| Tax |
| 1st year deduction - |
|
|
|
|
|
|
| New Law: Sec 179 Exp. - $250,000 |
$250,000 |
|
|
|
|
|
| Bonus Deprec. - 50% remaining amt. |
$105,000 |
|
|
|
|
|
| Annual depreciation at 7 year rate - 14.286% |
$15,000 |
|
|
|
|
|
Total |
$370,000 |
|
|
|
|
|
| at 34% tax rate |
$125,800 |
|
|
|
|
|
| Deprec. Years 2 - 7 |
$15,000 |
|
|
|
|
|
| at 34% tax rate |
$5,100 |
|
|
|
|
|
| |
Yr. 1 |
Yr. 2 |
Yr. 3 |
Yr. 4 |
Yr. 5 |
Total |
| Tax savings on Sec. 179 exp. & deprec. |
$125,800 |
$5,100 |
$5,100 |
$5,100 |
$5,100 |
$146,200 |
| NPV factor - 7% |
0.935 |
0.873 |
0.816 |
0.763 |
0.713 |
|
| NPV - Tax Savings on depreciation |
$117,623 |
$4,452 |
$4,162 |
$3,891 |
$3,636 |
$133,765 |
|
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