Problem:
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is a common practice with expensive, high-tech equipment). The scanner costs $5,000,000, 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 $1,750,000 per year for four years. Assume that the tax rate is 30 percent. You can borrow at 8 percent before taxes.
Required:
Question 1: Calculate the NAL- $
Qeustion 2: Would you buy or lease?