Hi-tek industries is considering a 4-year lease with annual, Ask an Expert

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Hi-Tek Industries is considering a 4-year lease with annual payments of $4,000. The firm can borrow at a rate of 6.7 percent and has a tax rate of 34 percent. The leased asset would cost $15,000 to purchase, have a 4-year tax life, and would be depreciated on a straight-line basis to zero. What would be the incremental cash flow in Year 4 from leasing instead of purchasing if the purchased asset had a pretax salvage value of $500?

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Financial Management, Finance

Category:- Financial Management
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