Eva analysis

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Reference no: EM135766

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?

Reference no: EM135766

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