Use the following information to work Problems I through 6: You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $4.3 million, and it would be depreciated straight-line to zero over four years. Because of radiation contamination, it actually will be completely valueless in four years. You can lease it for $1.275 million per year for four years. 1. Lease or Buy [LO3] 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 [LO3] What is the NAL of the lease from the lessor's view- point? Assume a 21 percent tax rate. 3. Finding the Break-Even Payment [LO3] 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 [LO3] Assume that your company does not antic- ipate paying taxes for the next several years. What are the cash flows from leasing in this case? 5. Setting the Lease Payment [LO3] In Problem 4, over what range of lease 5 payments will the lease be profitable for both parties? 6. MACRS Depreciation and Leasing [LO3] Rework Problem 1, assuming that the scanner will be depreciated as three-year property under MACRS (see Chapter 10 for the depreciation allowances). Use the following information to work Problems I through 6: You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a very common practice with expensive, high-tech equipment). The scanner costs $4.3 million, and it would be depreciated straight-line to zero over four years. Because of radiation contamination, it actually will be completely valueless in four years. You can lease it for $1.275 million per year for four years. 1. Lease or Buy [LO3] 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 [LO3] What is the NAL of the lease from the lessor's view- point? Assume a 21 percent tax rate. 3. Finding the Break-Even Payment [LO3] 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 [LO3] Assume that your company does not antic- ipate paying taxes for the next several years. What are the cash flows from leasing in this case? 5. Setting the Lease Payment [LO3] In Problem 4, over what range of lease 5 payments will the lease be profitable for both parties? 6. MACRS Depreciation and Leasing [LO3] Rework Problem 1, assuming that the scanner will be depreciated as three-year property under MACRS (see Chapter 10 for the depreciation allowances)