Question

You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a common practice with expensive, high-tech equipment). The scanner costs $5,400,000 and 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 $1,540,000 per year for four years.

  

Assume a 25 percent tax bracket. You can borrow at 6 percent before taxes. What is the NAL of the lease from the lessor's viewpoint?

Answer 1