Question: 1. Greenlee Instruments (GI) can purchase a jet-cleaning machine for $1,100,000. The machine has a 5-year life and would be depreciated straight-line to a zero

1. Greenlee Instruments (GI) can purchase a jet-cleaning machine for $1,100,000. The machine has a 5-year life and would be depreciated straight-line to a zero book value, which is also the salvage value. Hibernia Leasing will lease the same machine to GI for five annual $200,000 lease payments paid at the end of each year. GI is in the 40% tax bracket. The after-tax cost of debt is 6% and the before-tax cost of capital for the project is 12%. Like the salvage value, both the change in expenses and ITC are also zero. To the nearest dollar, what is GI's net advantage to leasing?

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