Nyles Co. purchased a machine on January 1, 2018, for $2,500,000 for the express purpose of leasing it. The machine is expected to have a five-year life, no salvage value, and be depreciated on a straight-line monthly basis. On April 1, 2018, under a cancelable lease, Nyles leased the machine to Dunbar Company for $750,000 a year for a four-year period ending March 31, 2022. Nyles incurred total maintenance and other related costs under the provisions of the lease of $25,000 relating to the year ended December 31, 2018. Harley paid $750,000 to Nyles on April 1, 2018.

Instructions (a) Assuming an operating lease, what should be the income before income taxes derived by Nyles Co. from this lease for the year ended December 31, 2018? (b) What should be the total amount of lease expense incurred by Dunbar from this lease for the year ended December 31, 2018?