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You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner. The scanner costs $5.500,000, and it would be depreciated straight-line to
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner. The scanner costs $5.500,000, and it would be depreciated straight-line to zero over four years. Because of radiation contamination, it actually will be completely valueless in four years. You can lease it for $1,610,000 per year for four years. Assume that the tax rate is 25 percent. You can borrow at 7 percent before taxes. What would the lease payment have to be for both lessor and lessee to be indifferent about the lease?
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