Transcribed Image Text
Daily Enterprises is contemplating the acquisition of some newequipment. The purchase price is $35,000. The equipment has a4-year life. The company expects to sell the equipment at the endof year 4 for $7,000. The firm uses MACRS depreciation which allowsfor 33.33 percent, 44.44 percent, 14.82 percent, and 7.41 percentdepreciation over years 1 to 4, respectively. The equipment can beleased for $9,000 a year. The firm can borrow money at 9 percentand has a 33 percent tax rate. What is the incremental annual cashflow for year 4 if the company decides to lease the equipmentrather than purchase it?A. $-14,452B. $-6,100C. $-6,894D. $-11,120E. $-11,576
Other questions asked by students
Advance Math
Medical Sciences
Accounting