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step by step please Craxton Engineering will either purchase or lease a new $748,000 fabricator. If purchased, the fabricator will be depreciated on a straight-line
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Craxton Engineering will either purchase or lease a new $748,000 fabricator. If purchased, the fabricator will be depreciated on a straight-line basis over seven years. Craxton can lease the fabricator for $134,000 per year for seven years. Craxton's tax rate is 25%. (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 if the lease is a true tax lease? b. What are the free cash flow consequences of leasing the fabricator if the lease is a true tax lease? c. What are the incremental free cash flows of leasing versus buying? a. What are the free cash flow consequences of buying the fabricator if the lease is a true tax lease? The free cash flow at t=0 is S (Round to the nearest dollar.) The free cash flows at t=17 is $ (Round to the nearest dollar.) b. What are the free cash flow consequences of leasing the fabricator if the lease is a true tax lease? The free cash flows at t=06 is $ (Round to the nearest dollar.) c. What are the incremental free cash flows of leasing versus buying? (Select the best choice below.) A. The incremental cash flows are: FCF0=$26,714,FCF16=$127,214, and FCF7=$647,500. B. The incremental cash flows are: FCF0=$647,500,FCF16=$127,214, and FCF7=$26,714. C. The incremental cash flows are: FCF0=$647,500,FCF16=$26,714, and FCF7=$127,214. D. The incremental cash flows are: FCF0=$127,214,FCF16=$647,500, and FCF7=$26,714Step by Step Solution
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