Airplane Leasing Analysis—determine the after-tax and before-tax leasing payment

Case: Airplane Leasing Analysis—determine the after-tax and before-tax leasing payment

You work as a financial analyst for RBC. Your company is considering buying an airplane and then leasing it to Delta Air Lines. Your task is to determine the before-tax leasing payment.

You may choose an airplane of your choice (767, 777, 787)

Assume 20 year depreciation period in your lease analysis using the depreciation table in the notes or straight-line depreciation method.

Make your assumptions about the tax rate, required rate of return, insurance cost, maintenance and operating costs, and salvage value. (Please use Google Search to help you with the airplane price, expenses, maintenance cost, insurance cost, and depreciation value.)

You final report will be in a word document, not the excel file. You may copy and paste the excel file or take a photo shot and include it in the word file. If you have difficulty transporting your Excel calculation, than you may follow my example document to present your calculations.

1. Description of your airplane

2. Explanation of your assumption of the parameters such as tax rate, required rate of return, …

3. Explanation of your calculation of after tax leasing payment

4. your final calculation of before tax break even leasing payment.

Note: Follow the notes on Break Even Rent Example for reference