A lease has a term of 5 years with annual payments of $6,400.The asset would cost $45,000 to buy and would be depreciated straightline to a zero salvage value over 5 years.The actual salvage value is zero.If the firm has a tax rate of 21 percent,what is the incremental cash flow in Year 5 of leasing rather than purchasing?
A) −$4,224
B) −$3,198
C) −$6,946
D) −$7,250
E) −$6,880
Correct Answer:
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