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 $6.5 million and it qualifies for a 30% CCA rate. Because of radiation contamination, it is valueless in four years. You can lease it for $1.925 million per year for four years. You can borrow at 11.0% pre-tax. Assume that the assets pool remains open and payments are made at the end of the year.

Assume that your company does not contemplate paying taxes for the next several years. What are the cash flows from leasing?