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 $6.65 and 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 $1,738,956 per year for four years.

Assume that the tax rate is 25%. You can borrow at 9.64% before taxes. What would be the cashflows for the leasee?

HINT: Determine the cashflows if you buy, the cashflows if you lease, and compute the difference. After computing the difference, compute the NPV using the after-tax interest rate.