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    Incremental Cash Flows

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    1. A corporation donates a valuable painting from its private collection to an art museum. Which of the following are incremental cash flows associated with the donation?
    a. The price the firm paid for the painting.
    b. The current market value of the painting.
    c. The deduction from incom that it declares for its charitable gift.
    d. The reduction in taxes due to its declared tax deduction.

    2. Under what circumstances is a capital lease a better alternative than buying assets?

    3. Under what circumstances is a capital lease a better alternative to an operating lease?

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    Solution Preview

    1) A corporation donates a valuable painting from its private collection to an art museum. Which of the following are incremental cash flows associated with the donation?

    a. The price the firm paid for the painting. Sunk Cost
    b. The current market value of the painting. Opportunity Cost
    c. The ...

    Solution Summary

    Incremental Cash Flows are noted.

    $2.49

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