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 $6.3 million and it qualifies for a 30% CCA rate. Because of radiation contamination, it is valueless in four years. You can lease it for $1.875 million per year for four years. Assume that the assets pool remains open and payments are made at the beginning of the year. Assume the tax rate is 37%. You can borrow at 8% pre-tax.

Calculate the NAL. (Enter the answer in dollars and not in millions of dollars. Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

NAL $

Should you lease or buy?

multiple choice

• Buy

• Lease