Tax shields are used to increase cash flow

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1. Tax shields are used to increase cash flow. How does a tax shield operate in setting up an after tax cash flow analysis? Be as specific as possible and provide examples. Be sure to cite any resources used.

2. If you were the President/CEO of General Electric, what terms would you insist upon when designing lease terms for lessees of large scale GE products, such as MRI's and other large medical equipment, and why?

3. The RST Corp. is considering the purchase of some new equipment which will cost $120,000, last for 5 years, and generate after-tax cost savings of $45,000, $37,000, $25,000, $20,000, and $20,000 respectively per year. The firm’s cost of capital is 10%. The IRR of this project is

8.36%.

8.40%.

8.58%.

12%.

Reference no: EM131914989

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