Question

Laidlaw Inc. is evaluating the purchase of a new piece of equipment costing $250,000.
The equipment is expected to have a life of 15 years. The firms after-tax cost of financing is 15.3%. The additional before-tax operating cash flows associated with the acquisition of the equipment are expected to average $60,625 per year. The firm’s tax rate is 20%. Using an EVA analysis, should Laidlaw acquire the new piece of equipment?



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  • CreatedJuly 26, 2013
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