Multiple Choice
Hi-Tek Industries is considering a lease with four annual payments of $4,000 each.The firm can borrow at a rate of 6.7 percent and has a tax rate of 21 percent.The leased asset would cost $15,000 to purchase,have a tax life of 4 years,and would be depreciated on a straightline 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?
A) −$4,318.10
B) −$3,605.50
C) −$4,211.51
D) −$4,342.50
E) −$3,900.00
Correct Answer:
Verified
Correct Answer:
Verified
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