Question: Use the spreadsheet model to rework Parts a and b of Problem 20-8. Then answer the following question. In problem 20-8 a and b parts

Use the spreadsheet model to rework Parts a and b of Problem 20-8.
Then answer the following question.
In problem 20-8 a and b parts
a. Should the loom be leased or purchased?
b. The salvage value is clearly the most uncertain cash flow in the analysis. Assume that the appropriate salvage value pretax discount rate is 15%. What would be the effect of a salvage value risk adjustment on the decision?
c. Accepting that the corporate WACC should be used equally to discount all anticipated cash flows, at what cost of capital would the firm be indifferent between leasing and buying?

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