|
Finance Comparison
AFQS can be used to compare the Net Present Value (NPV) of different type of
finance scenarios. For example, lease vs. hire purchase or vs. equipment loan.
The comparison is performed for a given customer pre-tax discount rate (Internal Rate of Return or Dual Rate
of Return analysis method) or an after-tax margin (Actuarial Rate of Return), taking into account various
customer specific parameters such as the balance month, GST lag, income tax
lags, rental treatment (cash or accrual), etc.
Example:
In the following example, a 48 month lease of a $25,000 equipment item is
compared with a hire purchase at a pre-tax discount rate of 5%.
| Net Present Value |
 |
Pre-tax
Discount Rate |
Approximate
After-tax
Discount Rate |
Net Present Value |
| Finance Lease |
Hire Purchase (Discl) |
| 5.000% |
3.513% |
$8,796.09 |
$8,847.64 |
|
| Monthly Cashflow |
| Date |
Finance Lease |
Hire Purchase (Discl) |
Net
Cashflow |
PV
Earnings |
PV
Balance |
Net
Cashflow |
PV
Earnings |
PV
Balance |
| Aug 2021 |
-$433.75 |
$0.00 |
$8,362.34 |
-$457.00 |
$0.00 |
$8,390.64 |
| Sep 2021 |
-$394.32 |
$24.48 |
$7,992.51 |
$2,363.63 |
$24.56 |
$10,778.83 |
| Oct 2021 |
-$394.32 |
$23.40 |
$7,621.59 |
-$457.00 |
$31.56 |
$10,353.39 |
| Nov 2021 |
-$394.32 |
$22.31 |
$7,249.58 |
-$457.00 |
$30.31 |
$9,926.70 |
| Dec 2021 |
-$394.32 |
$21.22 |
$6,876.48 |
-$457.00 |
$29.06 |
$9,498.76 |
| Jan 2022 |
-$394.32 |
$20.13 |
$6,502.29 |
-$457.00 |
$27.81 |
$9,069.57 |
| Feb 2022 |
-$394.32 |
$19.04 |
$6,127.01 |
-$457.00 |
$26.55 |
$8,639.12 |
| Mar 2022 |
-$394.32 |
$17.94 |
$5,750.63 |
-$457.00 |
$25.29 |
$8,207.41 |
| Apr 2022 |
-$394.32 |
$16.84 |
$5,373.14 |
-$457.00 |
$24.03 |
$7,774.44 |
| May 2022 |
-$394.32 |
$15.73 |
$4,994.55 |
-$457.00 |
$22.76 |
$7,340.20 |
| Jun 2022 |
-$394.32 |
$14.62 |
$4,614.86 |
-$457.00 |
$21.49 |
$6,904.69 |
| Subtotal |
-$4,376.95 |
$195.71 |
|
-$2,206.37 |
$263.43 |
|
| |
| Jul 2022 |
-$394.32 |
$13.51 |
$4,234.05 |
-$457.00 |
$20.21 |
$6,467.91 |
| Aug 2022 |
-$394.32 |
$12.40 |
$3,852.12 |
-$457.00 |
$18.94 |
$6,029.84 |
| Sep 2022 |
-$394.32 |
$11.28 |
$3,469.08 |
-$457.00 |
$17.65 |
$5,590.50 |
| Oct 2022 |
-$394.32 |
$10.16 |
$3,084.92 |
-$457.00 |
$16.37 |
$5,149.86 |
| Nov 2022 |
-$394.32 |
$9.03 |
$2,699.63 |
-$457.00 |
$15.08 |
$4,707.94 |
| Dec 2022 |
$906.94 |
$7.90 |
$3,614.47 |
$617.70 |
$13.78 |
$5,339.43 |
| Jan 2023 |
-$394.32 |
$10.58 |
$3,230.73 |
-$457.00 |
$15.63 |
$4,898.06 |
| Feb 2023 |
-$394.32 |
$9.46 |
$2,845.87 |
-$457.00 |
$14.34 |
$4,455.40 |
| Mar 2023 |
-$394.32 |
$8.33 |
$2,459.88 |
-$457.00 |
$13.04 |
$4,011.44 |
| Apr 2023 |
-$69.01 |
$7.20 |
$2,398.08 |
-$188.32 |
$11.74 |
$3,834.86 |
| May 2023 |
-$394.32 |
$7.02 |
$2,010.78 |
-$457.00 |
$11.23 |
$3,389.09 |
| Jun 2023 |
-$394.32 |
$5.89 |
$1,622.34 |
-$457.00 |
$9.92 |
$2,942.01 |
| Subtotal |
-$3,105.27 |
$112.76 |
|
-$4,140.62 |
$177.94 |
|
| |
| Jul 2023 |
-$69.01 |
$4.75 |
$1,558.09 |
-$188.32 |
$8.61 |
$2,762.30 |
| Aug 2023 |
-$394.32 |
$4.56 |
$1,168.33 |
-$457.00 |
$8.09 |
$2,313.39 |
| Sep 2023 |
-$394.32 |
$3.42 |
$777.43 |
-$457.00 |
$6.77 |
$1,863.16 |
| Oct 2023 |
-$69.01 |
$2.28 |
$710.70 |
-$188.32 |
$5.45 |
$1,680.29 |
| Nov 2023 |
-$394.32 |
$2.08 |
$318.46 |
-$457.00 |
$4.92 |
$1,228.21 |
| Dec 2023 |
$374.60 |
$0.93 |
$694.00 |
$104.65 |
$3.60 |
$1,336.45 |
| Jan 2024 |
-$69.01 |
$2.03 |
$627.02 |
-$188.32 |
$3.91 |
$1,152.04 |
| Feb 2024 |
-$394.32 |
$1.84 |
$234.54 |
-$457.00 |
$3.37 |
$698.41 |
| Mar 2024 |
-$394.32 |
$0.69 |
-$159.10 |
-$457.00 |
$2.04 |
$243.46 |
| Apr 2024 |
-$39.43 |
-$0.47 |
-$198.99 |
-$182.25 |
$0.71 |
$61.92 |
| May 2024 |
-$394.32 |
-$0.58 |
-$593.90 |
-$457.00 |
$0.18 |
-$394.90 |
| Jun 2024 |
-$394.32 |
-$1.74 |
-$989.96 |
-$457.00 |
-$1.16 |
-$853.05 |
| Subtotal |
-$2,632.09 |
$19.79 |
|
-$3,841.57 |
$46.51 |
|
| |
| Jul 2024 |
-$39.43 |
-$2.90 |
-$1,032.29 |
-$182.25 |
-$2.50 |
-$1,037.80 |
| Aug 2024 |
-$394.32 |
-$3.02 |
-$1,429.63 |
-$457.00 |
-$3.04 |
-$1,497.84 |
| Sep 2024 |
-$394.32 |
-$4.19 |
-$1,828.13 |
-$457.00 |
-$4.39 |
-$1,959.23 |
| Oct 2024 |
-$39.43 |
-$5.35 |
-$1,872.92 |
-$182.25 |
-$5.74 |
-$2,147.21 |
| Nov 2024 |
-$394.32 |
-$5.48 |
-$2,272.72 |
-$457.00 |
-$6.29 |
-$2,610.50 |
| Dec 2024 |
-$335.17 |
-$6.65 |
-$2,614.55 |
-$601.86 |
-$7.64 |
-$3,220.00 |
| Jan 2025 |
-$39.43 |
-$7.65 |
-$2,661.63 |
-$182.25 |
-$9.43 |
-$3,411.68 |
| Feb 2025 |
-$394.32 |
-$7.79 |
-$3,063.75 |
-$457.00 |
-$9.99 |
-$3,878.67 |
| Mar 2025 |
-$394.32 |
-$8.97 |
-$3,467.03 |
-$457.00 |
-$11.36 |
-$4,347.02 |
| Apr 2025 |
-$39.43 |
-$10.15 |
-$3,516.62 |
-$221.50 |
-$12.73 |
-$4,581.25 |
| May 2025 |
-$394.32 |
-$10.30 |
-$3,921.23 |
-$457.00 |
-$13.41 |
-$5,051.66 |
| Jun 2025 |
-$394.32 |
-$11.48 |
-$4,327.03 |
-$457.00 |
-$14.79 |
-$5,523.45 |
| Subtotal |
-$3,253.14 |
-$83.94 |
|
-$4,569.11 |
-$101.28 |
|
| |
| Jul 2025 |
-$39.43 |
-$12.67 |
-$4,379.13 |
-$221.50 |
-$16.17 |
-$5,761.12 |
| Aug 2025 |
$6,539.43 |
-$12.82 |
$2,147.48 |
$7,409.09 |
-$16.87 |
$1,631.10 |
| Sep 2025 |
-$590.91 |
$6.29 |
$1,562.85 |
-$1,500.00 |
$4.78 |
$135.87 |
| Oct 2025 |
$354.89 |
$4.58 |
$1,922.32 |
$235.50 |
$0.40 |
$371.77 |
| Nov 2025 |
$0.00 |
$5.63 |
$1,927.95 |
$0.00 |
$1.09 |
$372.86 |
| Dec 2025 |
$0.00 |
$5.64 |
$1,933.59 |
-$237.02 |
$1.09 |
$136.93 |
| Jan 2026 |
$354.89 |
$5.66 |
$2,294.14 |
$235.50 |
$0.40 |
$372.83 |
| Feb 2026 |
$0.00 |
$6.72 |
$2,300.86 |
$0.00 |
$1.09 |
$373.92 |
| Mar 2026 |
$0.00 |
$6.74 |
$2,307.59 |
$0.00 |
$1.09 |
$375.01 |
| Apr 2026 |
$354.89 |
$6.76 |
$2,669.23 |
$195.87 |
$1.10 |
$571.98 |
| May 2026 |
$0.00 |
$7.81 |
$2,677.05 |
$0.00 |
$1.67 |
$573.65 |
| Jun 2026 |
$0.00 |
$7.84 |
$2,684.89 |
$0.00 |
$1.68 |
$575.33 |
| Subtotal |
$6,973.75 |
$38.17 |
|
$6,117.43 |
-$18.65 |
|
| |
| Jul 2026 |
$354.89 |
$7.86 |
$3,047.64 |
$195.87 |
$1.68 |
$772.88 |
| Aug 2026 |
$0.00 |
$8.92 |
$3,056.56 |
$0.00 |
$2.26 |
$775.15 |
| Sep 2026 |
$0.00 |
$8.95 |
$3,065.51 |
$0.00 |
$2.27 |
$777.42 |
| Oct 2026 |
$354.89 |
$8.97 |
$3,429.37 |
$195.87 |
$2.28 |
$975.56 |
| Nov 2026 |
$0.00 |
$10.04 |
$3,439.41 |
$0.00 |
$2.86 |
$978.42 |
| Dec 2026 |
-$3,073.98 |
$10.07 |
$375.49 |
-$800.01 |
$2.86 |
$181.27 |
| Jan 2027 |
$354.89 |
$1.10 |
$731.48 |
$195.87 |
$0.53 |
$377.67 |
| Feb 2027 |
$0.00 |
$2.14 |
$733.62 |
$0.00 |
$1.11 |
$378.77 |
| Mar 2027 |
$0.00 |
$2.15 |
$735.77 |
$0.00 |
$1.11 |
$379.88 |
| Apr 2027 |
-$413.61 |
$2.15 |
$324.32 |
$15.68 |
$1.11 |
$396.67 |
| May 2027 |
$0.00 |
$0.95 |
$325.27 |
$0.00 |
$1.16 |
$397.83 |
| Jun 2027 |
$0.00 |
$0.95 |
$326.22 |
$0.00 |
$1.16 |
$399.00 |
| Subtotal |
-$2,422.93 |
$64.26 |
|
-$196.73 |
$20.40 |
|
| |
| Jul 2027 |
-$413.61 |
$0.96 |
-$86.43 |
$15.68 |
$1.17 |
$415.84 |
| Aug 2027 |
$0.00 |
-$0.25 |
-$86.69 |
$0.00 |
$1.22 |
$417.06 |
| Sep 2027 |
$0.00 |
-$0.25 |
-$86.94 |
$0.00 |
$1.22 |
$418.28 |
| Oct 2027 |
-$413.61 |
-$0.25 |
-$500.80 |
$15.68 |
$1.22 |
$435.19 |
| Nov 2027 |
$0.00 |
-$1.47 |
-$502.27 |
$0.00 |
$1.27 |
$436.46 |
| Dec 2027 |
$117.44 |
-$1.47 |
-$386.30 |
-$423.09 |
$1.28 |
$14.64 |
| Jan 2028 |
-$413.61 |
-$1.13 |
-$801.04 |
$15.68 |
$0.04 |
$30.37 |
| Feb 2028 |
$0.00 |
-$2.35 |
-$803.38 |
$0.00 |
$0.09 |
$30.46 |
| Mar 2028 |
$0.00 |
-$2.35 |
-$805.74 |
$0.00 |
$0.09 |
$30.54 |
| Apr 2028 |
$0.00 |
-$2.36 |
-$808.09 |
$0.00 |
$0.09 |
$30.63 |
| May 2028 |
$0.00 |
-$2.37 |
-$810.46 |
$0.00 |
$0.09 |
$30.72 |
| Jun 2028 |
$0.00 |
-$2.37 |
-$812.83 |
$0.00 |
$0.09 |
$30.81 |
| Subtotal |
-$1,123.38 |
-$15.67 |
|
-$376.06 |
$7.87 |
|
| |
| Jul 2028 |
$0.00 |
-$2.38 |
-$815.21 |
$0.00 |
$0.09 |
$30.90 |
| Aug 2028 |
$0.00 |
-$2.39 |
-$817.60 |
$0.00 |
$0.09 |
$30.99 |
| Sep 2028 |
$0.00 |
-$2.39 |
-$819.99 |
$0.00 |
$0.09 |
$31.08 |
| Oct 2028 |
$0.00 |
-$2.40 |
-$822.39 |
$0.00 |
$0.09 |
$31.18 |
| Nov 2028 |
$0.00 |
-$2.41 |
-$824.80 |
$0.00 |
$0.09 |
$31.27 |
| Dec 2028 |
$827.22 |
-$2.41 |
$0.00 |
-$31.36 |
$0.09 |
$0.00 |
| Jan 2029 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
| Feb 2029 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
| Mar 2029 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
| Apr 2029 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
| May 2029 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
| Jun 2029 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
$0.00 |
| Subtotal |
$827.22 |
-$14.38 |
|
-$31.36 |
$0.55 |
|
| Total |
-$9,112.79 |
$316.69 |
|
-$9,244.40 |
$396.76 |
|
|
| Assumptions |
| Commence Date |
Aug 2021 |
| Resale Date |
Aug 2025 |
| Resale Amount |
$15,000.00 |
| Pre-tax Discount Rate |
5.000% |
| Balance Month |
June |
| Rental Treatment |
Cash |
| Analysis Method |
Internal Rate of Return (IRR) |
| Pre-tax Sinking Fund Rate |
N/A |
| Pre-tax Cost of Funds |
N/A |
| GST Period |
Monthly |
| GST Lag |
1 month |
| GST Accounted |
Non-cash basis (accrual) |
See also:
|
|
|
GlossaryActuarial Rate of
Return (Net Yield)Calculation
FunctionsCost of FundsDual Rate of ReturnFinance
ComparisonInput Tax Credit (ITC)Internal Rate of Return (IRR)Luxury Car Tax (LCT)Notional ITCNotional ProfitRate PremiumRepayment StructuresTax Loss ExampleTax ShelterVendor Subsidy
Goods and services tax (GST)Luxury car tax (LCT)Luxury Car Tax Rate and Thresholds
Technical Summary
Installation instructions and technical
requirements.
User Guide
Explanation of the main user interface
features. |