CASE STUDIES: Automotive Scenarios

To get a real feel for the financial impact of a Like-Kind Exchange (LKE) program, it is best to review the 5-year cash flow benefit for certain volume levels. Every business is unique so each implementation of an LKE program is slightly different; however, these examples should provide a general understanding of the benefits.

Scenario 1: 100 Cars Sold per Year

ASSUMPTIONS:
Annual Rental Car Sales: $1,800,000
• Tax Life: 5 Years
• Average Age at Sale: 1 Year
• Income Tax Rate: 35%
• Exp. Annual Growth: 5%
• Exp. Annual Inflation: 2%

5-Yr Bottom-Line Benefit: $524,000

Scenario 2: 200 Cars Sold per Year

ASSUMPTIONS
• Annual Rental Car Sales: $3,600,000
• Tax Life: 5 Years
• Average Age at Sale: 1 Year
• Income Tax Rate: 35%
• Exp. Annual Growth: 5%
• Exp. Annual Inflation: 2%

5-Yr Bottom-Line Benefit: $1,048,000