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Financing vs. Tax Savings Arbitrage

Model first-year positive cash flow when pairing write-offs with equipment loans

Instructions: How Financing Cash-Flow Arbitrage Works

Businesses are permitted to deduct 100% of an eligible asset's cost in Year 1 even if the asset is financed with a small down payment. If your tax savings exceed your down payment and the first 12 monthly loan payments, your business achieves positive net cash flow on the acquisition in Year 1.

Financing Details

First-Year Cash Analysis

Estimated Monthly Payment $1,403/mo
Total Year 1 Out-of-Pocket (Down + 12 Payments) $21,836
Year 1 Tax Cash Savings $26,250
Net First-Year Cash Advantage
+$4,414

Positive values indicate cash tax reduction exceeds Year 1 loan payments.

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