Assume that your company does not contemplate paying taxes for

Assume that your company does not contemplate paying taxes for the next several years. What are the cash flows from leasing in this case?

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 $5,200,000, 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 $1,525,000 per year for four years.


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