Alex opened Excel to calculate the .

Alex started with the purchase model. If Midwest Logistics bought the vans outright for $3 million, they’d get the . Under current tax laws, they could front-load the depreciation, reducing their taxable income significantly in the first few years.

Sarah looked at the NAL calculation. The lease was slightly more expensive in a vacuum, but it saved the warehouse project. "Flexibility is an asset we can't see on the balance sheet," she admitted.

Alex mapped out the purchase price, the tax savings from depreciation, and the estimated salvage value (the "leftover" cash when they sell the vans later), all discounted at the company's after-tax cost of debt.

However, there was the . That $3 million would be sucked out of their working capital. They wouldn't be able to invest in the new automated warehouse project, which had a projected IRR (Internal Rate of Return) of 15%. Chapter 2: The "Lease" Alternative

The math was tight. Owning had a slight edge on paper because of the high salvage value Alex assumed. But when Alex factored in the and the fact that a lease preserved cash for the warehouse project, the "hidden" value of the lease started to shine. The Conclusion

Alex mapped out the after-tax lease payments.

Midwest Logistics signed the lease. Alex saved the cash, the warehouse got built, and the fleet stayed green.