A.

You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $2,000,000, and it would be depreciated straight-line to zero over 4 years. Because of radiation contamination, it will actually be completely valueless in 4 years. You can lease it for $700,000 per year for four years. Assume that your company does not anticipate paying taxes for the next several years. You can borrow at 7 percent before taxes. What is the NAL of this lease? (Do not round your intermediate calculations.)

B. You sold a $30 put contract on EDF stock at an option price of $1.30. The option was exercised when the stock price was $26.10 a share. What is your total net profit or loss?

C. The Floral Shoppe and Maggie's Flowers are all-equity firms. The Floral Shoppe has 1,700 shares outstanding at a market price of $17 a share. Maggie's Flowers has 2,450 shares outstanding at a price of $23 a share. Maggie's Flowers is acquiring The Floral Shoppe for $30,000 in cash. The incremental value of the acquisition is $2,800. What is the net present value of acquiring The Floral Shoppe to Maggie's Flowers?