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Suppose a hospital is analyzing leasing versus buying an MRI machine. The hospital can lease it for $750000 per year for 5 years. If it

Suppose a hospital is analyzing leasing versus buying an MRI machine. The hospital can lease it for $750000 per year for 5 years. If it buys the MRI machinetoday, it will cost $2800000. The machine can be depreciated using the straght-line depreciation method over its life of 5 years. Because of projected heavy use, the machine will actually be completely valueless at the end of 5 years. Assume the tax rate is 30%. You can borrow at 7.5% if you want to borrow money from a bank to buy the machine. What is the net advantage of leasing(NAL) for the hospital?

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