Bridge Water Engineering needs to acquire $36,000 worth of new equipment. The equipment has a 4-year life after which time it will be worthless. The equipment belongs to a 30 percent CCA class
And can be leased for $9,500 a year. The ﬁrm can borrow money at 8 percent and has a 34 percent
Tax rate. What is the incremental annual cash ﬂow for year 3 if the company decides to lease the
Equipment rather than purchase it?
A) -$11,333
B) -$10,318
C) -$9,417
D) -$8,455
E) -$6,667

Question

Quizplus · Accepted Answer

The Answer of Bridge Water Engineering needs to acquire $36,000 worth of new equipment. The equipment has a 4-year life after which time it will be worthless. The equipment belongs to a 30 percent CCA class
And can be leased for $9,500 a year. The ﬁrm can borrow money at 8 percent and has a 34 percent
Tax rate. What is the incremental annual cash ﬂow for year 3 if the company decides to lease the
Equipment rather than purchase it?
A) -$11,333
B) -$10,318
C) -$9,417
D) -$8,455
E) -$6,667

Bridge Water Engineering Needs to Acquire $36,000 Worth of New