Question
A firm needs some new equipment. The equipment would cost $100,000 if purchased and would be depreciated straight-line over five years. No salvage is expected.
A firm needs some new equipment. The equipment would cost $100,000 if purchased and would be depreciated straight-line over five years. No salvage is expected. Alternatively, the company can lease the equipment for $25,000 per year. The marginal tax rate is 40%.
a) What are the incremental cash flows?
b) Compute NPV. Assume that the pre-tax cost of debt is 10%.
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Rich Dads Increase Your Financial IQ Get Smarter With Your Money
Authors: Robert T. Kiyosaki
1st Edition
1612680658, 978-1612680651
