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Burton Enterprises is trying to determine if leasing would be a better alternative than purchasing $61,000 of new equipment. The equipment has a 4-year life
Burton Enterprises is trying to determine if leasing would be a better alternative than purchasing $61,000 of new equipment. The equipment has a 4-year life after which time it will be worthless. The equipment belongs in a 20 percent CCA class and can be leased for $16,000 a year. The firm can borrow money at 7.25 percent and has a 35 percent tax rate. What is the incremental annual cash flow for year 2 if the company decides to lease the equipment rather than purchase it? 1) -$28,020 2) - $20,868 3) - $14,243 4) -$11,667 5) -$9,564
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