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 $7,870,000, and it 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 $2,350,000 per year for four years. Assume that the tax rate is 35 percent.

Suppose the entire $7,870,000 purchase price of the scanner is borrowed. The rate on the loan is 9 percent, and the loan will be repaid in equal annual installments.

Calculate the amount of annual loan repayment. (Round your answer to 2 decimal places. (e.g., 32.16))

Payment

$

Complete the schedules given below and calculate the NAL. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))

Amortization
	Beginning	Total	Interest	Principal	Ending
Year	Balance	Payment	Payment	Payment	Balance
1	$	$	$	$	$
2
3
4

Cash flows
	Aftertax			Total
Year	Loan Payment	OCF		Cash Flow
1	$	$	=	$
2	$	$	=	$
3	$	$	=	$
4	$	$	=	$

NAL

$