GF599 Unit 10 Sale-Leaseback Final Project Report Example

Course	GF599 Graduate Capstone in Finance
Unit	Unit 10
Paper type	Final project report
Length	About 1,230 words, 7 pages double-spaced
Format	APA 7 student paper
School	Purdue University Global
Program	MS in Finance
Updated	October 2026

Free sample paper for GF599 Unit 10

Keep the Buildings, Borrow Against Them: A Unit 10 Final Project Report for Tollbrook Tire and Service

[Student Name]

Purdue University Global

GF599: Graduate Capstone in Finance

Unit 10 Final Project Report

[Instructor Name]

[Date]

Tollbrook Tire and Service, its people, its figures and the investor's offer are composite and illustrative, computed in the project's model version 1.0; source codes refer to the provenance register; the sources cited are real.

What this part is doingLeading with the recommendation, as a client report should, shows the writer understands who the reader is.

Executive Summary

Recommendation: decline the investor's offer to buy the seven owned buildings and lease them back. Instead, borrow roughly $5.46 million, fixed for ten years, against the five strongest buildings and use it to pay down the revolving line of credit.

1. Implied cost of the investor's route: 7.57 percent net of tax, near a 10.1 percent pre-tax equivalent.

2. After-tax cost of the mortgage: 5.18 percent, 6.90 percent before tax.

3. Present-value advantage of keeping the buildings: about $2,760,000.

4. What would reverse the answer: a steady fall in the buildings' worth of nearly 2.9 percent a year until the lease ends.

Selling the buildings would be a way of borrowing $10.3 million that costs more than two percentage points a year above what the bank charges, because the chain would hand over buildings worth far more in fifteen years than the rent saves.

1. The Question

In August an investor offered $11,200,000 for Tollbrook's seven owned store buildings, with a fifteen-year absolute net lease starting at $756,000 a year and rising 2 percent annually (S1). The chain owes $6,400,000 on a floating-rate revolving line and wants to reduce it. The question this project answered is whether selling and leasing back costs the chain less after tax than keeping the buildings and borrowing against them. Store operations, the leased stores and the sale of the company were outside the scope.

2. The Method

A sale-leaseback is a loan in another form: cash now in exchange for fixed payments and the loss of the asset. The project therefore compared the after-tax cash flows of selling with those of keeping, found the rate that equates them, and set that rate beside the after-tax cost of a mortgage the bank has indicated it will provide. This approach discounts lease obligations at the after-tax borrowing rate because they carry the risk of debt, not of the business (Myers et al., 1976), and it recognizes that leasing creates value only where the two sides face different taxes or borrowing costs (Lewellen et al., 1976).

Four rival methods were rejected. Comparing the 6.75 percent cap rate with the 6.90 percent mortgage rate ignores taxes, lost depreciation, rising rent and the buildings' end value. An 11.4 percent hurdle, the chain's blended cost of capital, would have turned the answer upside down by shrinking the value of the buildings in year fifteen and treating contractual rent as risky. Simulation would have added precision only to assumed distributions. A survey of peer chains would have described other firms' choices, not this offer.

What this part is doingSummarizing each rejected method in one sentence keeps the final report readable while carrying forward the defense from Unit 4.

3. The Evidence

Once broker costs and the tax on the gain are paid, the sale leaves $10,265,000 in hand (S1, S3, S6). In present value at the after-tax mortgage rate, the after-tax rent costs $6,582,000, the lost depreciation shield $513,000 and the buildings given up at year fifteen $5,926,000. Net of everything, the investor's route is about $2.76 million the poorer choice.

The buildings' end value does most of the work. Without it, selling would look $3,170,000 better. With it, selling is clearly the more expensive route. This is why the investor's offer looked attractive at first reading and why the final recommendation differs from that first impression.

Fixed-charge coverage, measured under the credit agreement (S4), is 1.85 today. It would fall to 1.67 under the lease and to 1.80 under the mortgage. Both satisfy the 1.25 minimum.

The project also considered whether Tollbrook's situation is one where leasing typically pays. Leasing helps firms that lenders will not finance, since an owner can repossess its property faster than a bank can foreclose (Eisfeldt & Rampini, 2009). Tollbrook has a bank willing to lend against five buildings, so that advantage does not apply.

4. The Limits

The limitations table from Unit 8 is carried forward without change:

1. End value. The answer reverses only if the buildings fall to about $7,250,000 by year fifteen, roughly 65 percent of today's price.

2. Price evidence. The lease route stays above 7.2 percent after tax at every price the survey supports.

3. Tax rate. From 21 to 30 percent, the gap persists.

4. Mortgage rate. Bank debt would need a pre-tax rate above roughly ten percent before the sale became cheaper.

5. Unvalued options. Renewal options favor the lease; the freedom to sell or relocate favors ownership.

6. One offer, one chain. The result applies to these terms only.

Studies of sale-leaseback announcements find that outcomes depend on each firm's circumstances (Rutherford, 1990), so the report makes no general claim. It also leaves open one question: whether the two weakest sites, if they are expected to lose value quickly, could be sold alone. That would need a separate offer.

What this part is doingKeeping the limitations table intact, rather than softening it in the final version, shows integrity in reporting.

5. The Plan

1. Month 1: the owner-president declines the letter in writing.

2. Months 1 to 2: the chief financial officer obtains term sheets from three lenders.

3. Months 2 to 3: the controller orders appraisals and Phase I environmental assessments on five buildings.

4. Months 3 to 4: counsel reviews the documents, and the mortgage closes.

One-time costs are about $102,800. After closing, the revolving balance falls to $940,000, leaving about $8,060,000 of availability. Three quarterly tests follow: a locked rate no higher than 7.25, coverage of at least 1.70 and availability above $8,000,000.

6. What the Owner Should Watch

The recommendation rests most heavily on the buildings holding their value. If a competitor opens beside a store, a town loses a major employer, or electric vehicles reduce traffic faster than expected, the comparison should be rerun. Reported results are more trustworthy when the reader can see which assumptions they depend on (Leamer, 1983), and this report has tried to make that dependence plain.

7. How the Answer Developed Over the Term

The recommendation did not begin as the obvious one. When the letter arrived, the owner-president set the investor's yield against the bank's quoted rate, saw the first was lower, and leaned toward selling, and the first rough model, built without the buildings' end value, agreed with her. The answer changed in Unit 4, when the method defense showed that the comparison had to include what the chain would own in year fifteen, and it held through every test that followed: the price band, the tax range, the mortgage rate and the partial sale. Reporting that history matters, because the owner will be asked by the investor, and perhaps by her own managers, why a higher price than she expected was still the wrong deal. The short answer is that the investor was paying for the buildings' future as well as their rent.

Appendices

A. Year-by-year cash flows for both routes, years zero to fifteen. B. The provenance register, sources S1 to S9, with release conditions. C. Sensitivity tables for price, tax rate, mortgage rate and end value. D. A glossary written for a reader who runs tire stores, covering cap rate, absolute net lease, depreciation shield, fixed-charge coverage and present value.

References

Eisfeldt, A. L., & Rampini, A. A. (2009). Leasing, ability to repossess, and debt capacity. The Review of Financial Studies, 22(4), 1621-1657. https://doi.org/10.1093/rfs/hhn026

Leamer, E. E. (1983). Let's take the con out of econometrics. American Economic Review, 73(1), 31-43.

Lewellen, W. G., Long, M. S., & McConnell, J. J. (1976). Asset leasing in competitive capital markets. The Journal of Finance, 31(3), 787-798. https://doi.org/10.1111/j.1540-6261.1976.tb01923.x

Myers, S. C., Dill, D. A., & Bautista, A. J. (1976). Valuation of financial lease contracts. The Journal of Finance, 31(3), 799-819. https://doi.org/10.1111/j.1540-6261.1976.tb01924.x

Rutherford, R. C. (1990). Empirical evidence on shareholder value and the sale-leaseback of corporate real estate. Real Estate Economics, 18(4), 522-529. https://doi.org/10.1111/1540-6229.00535

GF599 Unit 10 instructions, in plain terms

The final GF599 report asks you to rewrite ten units of work as one argument for the person who will make the decision. Put the recommendation on page one with the handful of numbers that support it, including what would change it. Restate the question and its scope briefly. Explain the method in plain language, with each rejected alternative summarized in a sentence. Present the evidence with exhibits that reconcile, and identify the input that drives the result. Carry the limitations forward without softening them. Summarize the implementation plan and its tests. Add a section on what the decision maker should watch after the decision, and, if the answer changed during the project, explain how. Put schedules, source registers, sensitivity tables and a glossary in appendices. Write for a reader who runs the business, not for a finance faculty. Cite the lease, real estate and reporting research you relied on in APA 7.

Inside the GF599 Unit 10 example

The executive summary leads with the recommendation and four numbered results, and the highlighted sentence explains the decision in one line. Section 1 restates the August offer and the scope. Section 2 explains the loan framing with Myers, Dill and Bautista and Lewellen, Long and McConnell, and dismisses four rival methods in a paragraph. Section 3 gives $10,265,000 of net proceeds, the three present-value costs and the $3.17 million illusion created by dropping the end value, then reports coverage and cites Eisfeldt and Rampini. Section 4 carries the six limitations forward and cites Rutherford against general claims. Section 5 summarizes the four-month plan, $102,800 of costs and the three tests. Section 6 lists what the owner should watch, drawing on Leamer. Section 7 explains how the answer changed after Unit 4. Four appendices close the report.

Reading the GF599 Unit 10 grading rubric

This GF599 capstone report is graded as a professional document as much as an academic one. Instructors look first at the executive summary: a decision maker should be able to act on the first page. Coherence across the ten units carries significant weight, since the report must read as one argument rather than pasted assignments, with figures that match from section to section. The method section earns credit for clarity and for showing the rejected alternatives briefly. Evidence is graded on reconciliation and on identifying the driving input. Limitations must appear intact, and softening them in the final version costs points. The plan and monitoring tests show the work can be used. A section explaining how the answer developed demonstrates intellectual honesty. Appendices are checked for completeness. Five sources on leasing, sale-leasebacks and reporting under uncertainty, in APA 7, support the report.

GF599 Unit 10 help from the desk

Final GF599 reports most often fail by stitching earlier units together without rewriting them, which repeats material and buries the recommendation. Some open with background instead of the answer. Figures sometimes drift between sections because earlier units were not updated after later changes. Limitations are often trimmed in the final version to make the case look stronger, which an attentive grader notices. Method sections can grow too long for a business reader. The plan may appear without its tests. Many reports never say what the decision maker should watch after the decision, so the analysis ends on the day it is delivered. Write the summary last and put it first, update every figure to the final model, keep one sentence per rejected method, carry the limits forward unchanged, and move schedules, sources and definitions to appendices a grader can check.

Get a GF599 Unit 10 example written to your instructions

Send your earlier unit submissions, your current figures and the final report prompt with its rubric, noting who in your organization will read it. The report comes back rewritten in one voice, recommendation first, every figure reconciled and revisions shown, with appendices for the detail. The first custom sample is free of charge and generally lands within 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

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GF599 Unit 10 questions, answered

How long should the final report be?

That depends on the prompt, which often fixes a page range. The sample runs about sixteen pages plus appendices, which gives the method two pages, the evidence roughly six and the plan three. Sixteen pages of one argument read better than twenty-five pages of pasted units, and graders can usually tell which they are holding.

Can the recommendation be to do nothing?

Declining an offer is a decision, and the sample makes it one by pairing the decline with a refinancing plan, responsible roles and tests. What reads as doing nothing is a report ending on considerations. If your analysis favors the status quo, the report should still say what the organization will do next and how it will know the choice held up.

Who is the audience, the instructor or the organization?

Both, in layers. The body is written for the organization's decision maker, here the owner-president, so it opens with the answer and defines its terms. The appendices serve the instructor, who needs the schedule, the sources and the tests to verify the work. Most capstone rubrics reward a report that could leave the course and still function.

Where can I find a free GF599 Unit 10 sample paper?

This page carries a full GF599 Unit 10 final project report recommending that a tire chain decline a sale-leaseback offer, with an executive summary, method, evidence, limitations, a four-month plan, appendices and APA 7 references.

Why does the report recommend declining a higher price than expected?

The investor was paying for the buildings' future as well as their rent. The lease route's implied cost is near 7.57 percent net of tax, and in fifteen years it would own nothing, while a mortgage costs 5.18 percent and the chain keeps the buildings.