Question
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
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 $5,200,000, and it would be depreciated straight-line to zero over five years. Because of radiation contamination, it actually will be completely valueless in five years. You can borrow at 6 percent before taxes. Your company does not anticipate paying taxes for the next several years, but the leasing company has a tax rate of 22 percent. Over what range of lease payments will the lease be profitable for both parties?
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