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 $4,000,000 and it would be depreciated straight-line to zero over 4 years. Because of radiation contamination, it will actually be completely valueless in 4 years. You can lease it for $1,200,000 per year for 4 years. Assume a 34 percent tax bracket. You can borrow at 7 percent before taxes. What is the net advantage to leasing (NAL) from the lessor's viewpoint?

Multiple Choice

$47,217.64

$52,187.92

$-49,702.78

$5,531,019.49

$49,702.78