step by step answer to these 10 questions.

GHT Topics in Corporate Finance scanner costs $3,000,000, and it would be depreciated straight-line to zero over four years. Because of radiation contamination, it will actually be completely valueless in four years. You can lease it for $895,000 per year for four years. 1. Lease or Buy Assume that the tax rate is 35 percent. You can borrow at 8 percent before taxes. Should you lease or buy? 2. Leasing Cash Flows What are the cash flows from the lease from the lessor's viewpoint? Assume a 35 percent tax bracket. 3. Finding the Break-Even Payment What would the lease payment have to be for both lessor and lessee to be indifferent about the lease? 4. Taxes and Leasing Cash Flows Assume that your company does not contemplate paying taxes for the next several years. What are the cash flows from leasing in this case? 5. Setting the Lease Payment In the previous question, over what range of lease payments will the lease be profitable for both parties? 6. MACRS Depreciation and Leasing Rework Problem 1 assuming that the scanner will be depreciated as three-year property under MACRS (see Chapter 10 for the depreciation allowances). Use the following information to work Problems 7 through 9: ITE The Thai One On Company is trying to decide whether to lease or buy a new computerassisted manufacturing system. Management has decided that it must use the system to stay competitive; it will provide 7 million baht in annual pretax cost savings. The system costs THB 60 million and will be depreciated straight-line to zero over five years. Thai's tax rate is 30 percent, and the firm can borrow at 8 percent. Lambert Leasing Company has offered to lease the drilling equipment to Thai for payments of THB 13 million per year. Lambert's policy is to require its lessees to make payments at the start of the year. 7. Lease or Buy What is the NAL for Thai? What is the maximum lease payment that would be acceptable to the company? 8. Leasing and Salvage Value Suppose it is estimated that the equipment will have an aftertax residual value of THB 5 million at the end of the lease. What is the maximum lease payment acceptable to Thai now? 9. Deposits in Leasing Many lessors require a security deposit in the form of a cash payment or other pledged collateral. Suppose Lambert requires Thai to pay a THB 2 million security deposit at the inception of the lease. If the lease payment is still THB 13 million, is it advantageous for Thai to lease the equipment now? 10. Lease versus Borrow Return to the case of the diagnostic scanner used in Problems I through 6. Suppose the entire $3,000,000 purchase price of the scanner is borrowed. The rate on the loan is 8 percent, and the loan will be repaid in equal installments. Create a lease versus buy analysis that explicitly incorporates the loan payments. Show that the NPV of leasing instead of buying is not changed from what it was in Problem 1. Why is this so