a)
To determine:
After tax cash flows of the lease and the purchase options.
Introduction:
The leasing is a financing technique which is available in the economy which allows the firm to obtain the use of certain fixed assets by making the periodic as well as contractual payments which are tax deductable.
The cash flows are the total money being transferred into the business and transferred out of the business. They would affect the liquidity of the firm when they are being transferred either ways.
b)
To determine:
Present value of each cash outflow stream.
c)
To determine:
Whether the firm should lease or purchase.
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