Use the following information to work Problems 1 through 6: Bas You work for a nuclear research laboratory that is contemplating leasing a diagnostic (Que scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $2,000,000, 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 $600,000 per year for four years. Taxes and Leasing Cash Flows Assume that your company does not contem- plate paying taxes for the next several years. What are the cash flows from leas- ing in this case? Setting the Lease Payment In the previous question, over what range of lease payments will the lease be profitable for both parties? Use the following information to work Problems 1 through 6: Bas You work for a nuclear research laboratory that is contemplating leasing a diagnostic (Que scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $2,000,000, 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 $600,000 per year for four years. 1. Lease or Buy Assume that the tax rate is 35 percent. You can borrow at 8 per- cent 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 35 percent tax bracket. 3. Finding the Break-Even Payment What would the lease payment have to be for both lessor and lessee to be indifferent about the lease? 4. Taxes and Leasing Cash Flows Assume that your company does not contem- plate paying taxes for the next several years. What are the cash flows from leas- ing in this case? Setting the Lease Payment In the previous question, over what range of lease payments will the lease be profitable for both parties? 5