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Hi-Tek Industries is considering a lease with four annual payments of $4,000 each. The firm can...

Hi-Tek Industries is considering a lease with four annual payments of $4,000 each. The firm can borrow at a rate of 6.7 percent and has a tax rate of 21 percent. The leased asset would cost $15,000 to purchase, have a tax life of 4 years, and would be depreciated on a straightline basis to zero. What would be the incremental cash flow in Year 4 from leasing instead of purchasing if the purchased asset had a pretax salvage value of $500?

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jeff jeffy answered 1 year ago
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