Question: You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner. The scanner costs $5,000,000 and would be depreciated straight-line to zero

You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner.

The scanner costs $5,000,000 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 $1,450,000 per year for four years. Assume the tax rate is 21 percent.

Suppose the entire $5,000,000 purchase price of the scanner is borrowed.

The rate on the loan is 7 percent and the loan will be repaid in equal installments.

Calculate the amount of the annual loan repayment.

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