Problem $21-1$ Lease or Buy

You work for a nuclear research laboratory that is contemplating leasing a diagnostic

scanner $($leasing is a common practice with expensive, high$-$tech equipment$).$ The

scanner costs $$4,700,000$ and would be depreciated straight$-$line to zero over three

years. Because of radiation contamination, it will actually be completely valueless in

three years. You can lease it for $$1,750,000$ per year for three years. Assume that the tax

rate is $23$ percent. You can borrow at $8$ percent before taxes. What is the NAL? $($Do not

round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,$

$32\mathrm{.}16.)$

Answer is complete but not entirely correct.

Should you lease or buy?

Lease

Buy