Question: 1. 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

1. 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 $6.44 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 $1,630,738 per year for four years. Assume that there are no taxes. You can borrow at 8.5% before taxes. What would be the cashflows for the leasee? HINT: Determine the cashflows if you buy, the cashflows if you lease, and compute the difference. After computing the difference, compute the NPV using the interest rate.

2. 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 $6.54 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 $1,664,807 per year for four years.

Assume that the tax rate is 30%. You can borrow at 8.94% before taxes. What would be the maximum payment that a leasee is willing to pay?

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