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 $2,000,000 and it would be depreciated straight-line to zero over 4 years. Because of radiation contamination, it will actually be completely valueless in 4 years. You can lease it for $600,000 per year for 4 years. Assume the tax rate is 34 percent. You can borrow at 8 percent before taxes. What is after tax cost of lease payment?

$596,000.00

$496,000.00

$421,000.00

$396,000.00

$521,000.00