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Your firm is considering leasing a new super computer. According to the lease agreement, there will be 6 lease payments of $6,400 per year with
Your firm is considering leasing a new super computer. According to the lease agreement, there will be 6 lease payments of $6,400 per year with the first payment occurring immediately. The super computer would cost $42,000 to buy and would be straight-line depreciated to a zero salvage value over the lease term. The actual salvage value is negligible because of technological obsolescence. The corporate tax rate is 28%. The firm can borrow at a rate of 3% per year. The incremental cash flow for Year O from leasing relative to purchasing the new super computer includes... (In the table below, select 1 for "Yes" or 2 for "No" for each item. "Yes" means it is directly included in Year O incremental cash flow, and "no" means it is not.) A Select "1" for "Yes", or "2" for "No". Select "1" for "Yes", or "2" for "No". 4 Select "1" for "Yes", or "2" for "No". 4 Select "1" for "Yes", or "2" for "No". After-tax lease payment (cash inflow) After-tax lease payment (cash outflow) Purchase price (cash inflow) Purchase price (cash outflow) Depreciation (cash inflow) Depreciation (cash outflow) Depreciation tax shield (cash inflow) Depreciation tax shield (cash outflow) ...and its dollar amount is Select "1" for "Yes", or "2" for "No". 4 Select "1" for "Yes", or "2" for "No". A Select "1" for "Yes", or "2" for "No". 4 Select "1" for "Yes", or "2" for "No". 1 2 3 4 $13,505 $15,000 $21,760 $24,000 $26,550 $30,000 $37,392 $42,000 15 6 8 This Year O incremental cash flow is INT positive (i.e., > 0) negative (i.e., 0) negative (i.e.,
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