Solve 3-5 using Excel

t Use the following information to work Problems 1-6. You work for a nuclear research labora- tory that is contemplating leasing a diagnostic scanner (leasing is a common practice with expensive, high-tech equipment). The scanner costs $5.2 million 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 $1.51 million per year for four years. 1. Lease or Buy Assume that the tax rate is 21 percent. You can borrow at 8 percent before taxes. Should you lease or buy? 2. Leasing Cash Flows What are the cash flows from the lease from the lessor's viewpoint? Assume a 21 percent tax rate. 3. Finding the Break-Even Payment What would the lease payment have to be for both the lessor and the lessee to be indifferent about the lease? 4. Taxes and Leasing Cash Flows Assume that your company does not contemplate paying taxes for the next several years. What are the cash flows from leasing in this case? 5. Setting the Lease Payment In the previous question, over what range of lease payments will the lease be profitable for both parties? 6. MACRS Depreciation and Leasing Rework Problem 1 assuming that the scanner will be depreciated as 3-year property under MACRS (see Chapter 6 for the depreciation allowances)