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BWFF 3013 Corporate Finance Case Study

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User Generated

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Business

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Universiti Utara Malaysia

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Case Study

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SEMESTER A192 SESSION 2019/2020
BWFF 3013 CORPORATE FINACE
GROUP B
CASE STUDY 3
PREPARED BY:
NAME
MATRIC
LIM HUI MENG
262287

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Q1
Lease option
year
1
2
3
5
lease payment ($)
16,900
16,900
16,900
16,900
tax rate (40%)
6,760
6,760
6,760
6,760
net cash outflow ($)
10,140
10,140
10,140
10,140
Purchase at 5th year
20,000
total net cash outflow
70,700
Purchase option:
year
1
2
3
5
loan repayment ($)
20,567
20,567
20,567
20,567
maintenance ($)
3,500
3,500
3,500
3,500
depreciation ($)
16,000
16,000
16,000
16,000
interest cost ($)
7,200
5,997
4,686
1,698
total cost ($)
26,700
25,497
24,186
21,198
tax shield (40%)
10,680
10,199
9,674
8,479
net cash outflow ($)
13,387
13,869
14,393
15,588
total cash outflow ($)
72,202
Working note for purchase option:
year
1
2
3
5
opening balance
80,000
66,633
52,062
18,869
payment
20,567
20,567
20,567
20,567
interest
7,200
5,997
4,686
1,698
principal
13,367
14,570
15,882
18,869
closing balance
66,633
52,062
36,180
0

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SEMESTER A192 SESSION 2019/2020 BWFF 3013 CORPORATE FINACE GROUP B CASE STUDY 3 PREPARED BY: NAME MATRIC LIM HUI MENG 262287 Q1 Lease option year 1 2 lease payment ($) 16,900 16,900 6,760 10,140 tax rate (40%) net cash outflow ($) 3 4 5 16,900 16,900 16,900 6,760 6,760 6,760 6,760 10,140 10,140 10,140 10,140 Purchase at 5th year 20,000 total net cash outflow 70,700 Purchase option: year 1 2 3 4 5 20,567 20,567 20,567 20,567 20,567 maintenance ($) 3,500 3,500 3,500 3,500 3,500 depreciation ($) 16,000 16,000 16,000 16,000 16,000 interest cost ($) 7,200 5,997 4,686 3,256 1,698 total cost ($) 26,700 25,497 24,186 22,756 21,198 tax shield (40%) 10,680 10,199 9,674 9,102 8,479 net cash outflow ($) 13,387 13,869 14,393 14,965 15,588 loan repayment ($) total cash outflow ($) 72,202 Working note for purchase optio ...
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