What about the other cash flows-are they all equally risky

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Problem - LEASE VERSUS BUY - To assist management in making the proper lease-versus-buy decision, you are asked to answer the following questions.

a. Assuming that the lease can be arranged, should Sullivan-Swift lease or borrow and buy the equipment? Explain.

b. Consider the $300,000 estimated salvage value. Is it appropriate to discount it at the same rate as the other cash flows? What about the other cash flows-are they all equally risky? Explain.

Reference no: EM132802910

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