ontih d. A lour-year fair market value lease with payments of $1150 per ar fair market value lease with payments of $790 per month e lease with payments of $925 per month c. A five-year fair market valu d. A five-year fair market value lease with payments of $1000 per month and an option to cancel after three years with a $9000 cancellation penalty The Leasing Decision 6. Craxton En e or lease a new $756,000 fabricator. If pur- will be depreciated for tax purposes on a straight-line basis gineering will either purchas chased, the fabricator over seven years. Craxton can lease the fabricator for $130,000 per year for sevenn years Craxton's tax rate is 35%. (Assume the fabricator has no residual value at the end of the seven years.) a. What are the free cash flow consequences of buying the fabricator? b. What are the free cash flow consequences of leasing the fabricator if the lease isa true tax lease? c. What are the incremental free cash flows of leasing versus buying