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What the incremental after tax annual cash flow

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Question 1: Ringo Manufacturing is considering the purchase of a new machine for $35,000. The machine is expected to save the firm $10,000 (before tax) per year in operating costs over a 5 year period, and can be depreciated on a straight-line basis to a zero salvage value over its life. Alternatively, the firm can lease the machine for $3,000 per year for 5 years, with the first payment due in 1 year. The firm's tax rate is 20%, and its before tax cost of debt is 8%. The incremental after tax annual cash flow (year 1-5) with the purchase is

Reference no: EM132858961

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