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 $4,500,000 and would be depreciated straight-line to zero over three years. Because of radiation contamination, it will actually be completely valueless in three years. You can lease it for $1,650,000 per year for three years. Assume the tax rate is 21 percent. The borrowing rate is 6 percent before taxes. Your company does not expect to pay taxes for the next several years, but the leasing company will pay taxes. Over what range of lease payments will the lease be profitable for both parties? (Enter your answers from lowest to highest. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Total payment range to

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 $4,500,000 and would be depreciated straight-line to zero over three years. Because of radiation contamination, it will actually be completely valueless in three years. You can lease it for $1,650,000 per year for three years. Assume the tax rate is 21 percent. The borrowing rate is 6 percent before taxes. Your company does not expect to pay taxes for the next several years, but the leasing company will pay taxes. Over what range of lease payments will the lease be profitable for both parties? (Enter your answers from lowest to highest. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Total payment range to

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EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 9P

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You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner that costs $2 million and it would be depreciated straight-line to zero over a four- year period at the end of which it will be completely valueless. Assume the tax rate is 33 percent. You can borrow at 6 percent before taxes. How much would the lease payment have to be for both the lessor and the lessee to be indifferent about the lease?
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner. The scanner costs $4,000,000 and it would be depreciated straight-line to zero over 4 years.Because of radiation contamination, it will actually be completely valueless in 4 years.You can lease it for $1,000,000 per year for 4 years. Assume the tax rate is 30 percent.You can borrow at 9 percent before taxes. What is the net advantage to leasing (NAL) from your company's standpoint? Please choose the correct option: A. $760,280.12B. $558,565.94C.$ 586,494.24D. $ 530,637.64E. $-558,565.94