| Table 3. Tractor Purchase - Borrowing |
|---|
| Purchase of a $70,0000 tractor, $45,000 down payment, $25,0000 paid over five year, seven percent interest, depreciated over seven years. |
|---|
| Cash Outflow | Expense |
|---|
| Current Period | $45,000 | $0 |
| Year 1 | $5,000 principal | $10,000 depreciation |
| $1,750 interest | $1,750 interest |
| Year 2 | $5,000 principal | $10,000 depreciation |
| $1,400 interest | $1,400 interest |
| Year 3 | $5,000 principal | $10,000 depreciation |
| $1,050 interest | $1,050 interest |
| Year 4 | $5,000 principal | $10,000 depreciation |
| $700 interest | $700 interest |
| Year 5 | $5,000 principal | $10,000 depreciation |
| $350 interest | $350 interest |
| Year 6 | $0 principal | $10,000 depreciation |
| Year 7 | $0 principal | $10,000 depreciation |
| Total | $75,250 | $75,250 |