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Ibarra, Incorporated, is considering leasing new equipment. The lease terms include five annual payments of $4,800 with the first payment occurring at the lease signing.

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Ibarra, Incorporated, is considering leasing new equipment. The lease terms include five annual payments of $4,800 with the first payment occurring at the lease signing. The equipment would cost $25,500 to buy and would be depreciated straight-line to a zero salvage value over 5 years. The firm can borrow at a rate of 5.5 percent and has a tax rate of 21 percent. What is the cash flow from leasing relative to purchasing in Year 0 ? Multiple Choice $20,700 $21,708 $16,353 $25,500 $20,145

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