What would be the incremental cash flow

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Question - YZ Ltd is considering a 4-year lease with annual payments of $5,500. The firm can borrow at a rate of 7 percent and has a tax rate of 30 percent. The leased asset would cost $20,000 to purchase, have a 4-year life, and would be depreciated on a straight-line 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 $900?

Reference no: EM132995792

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