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 $6.4 million and it qualifies for a 30% CCA rate. Because of radiation contamination, it is valueless in four years. You can lease it for $1.920 million per year for four years. You can borrow at 10.5% pre-tax. Assume that the assets pool remains open and payments are made at the end of the year. Assume that your company does not contemplate paying taxes for the next several years. What are the cash flows from leasing? (Enter the answer in dollars and not in millions of dollars. Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NAL $

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 $6.4 million and it qualifies for a 30% CCA rate. Because of radiation contamination, it is valueless in four years. You can lease it for $1.920 million per year for four years. You can borrow at 10.5% pre-tax. Assume that the assets pool remains open and payments are made at the end of the year. Assume that your company does not contemplate paying taxes for the next several years. What are the cash flows from leasing? (Enter the answer in dollars and not in millions of dollars. Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.) NAL $

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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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 $4.3 million 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 $1.275 million per year for four years. Assume that the tax rate is 21 percent. You can borrow at 8 percent before taxes. Calculate the NAL. Should you lease or buy?
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is very common practice with expensive, high-tech equipment). The scanner costs $1,000,000 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 $300,000 per year for four years. Assume a 35 per cent tax bracket. You can borrow at 8 per cent before taxes. Should you lease or buy? What would the lease payment have to be for both lessor & lessee to be indifferent about the lease? Rework problem 1 assuming that the scanner will be depreciated as 3-year property under MACRS.
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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 $5.98 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 $1,340,692 per year for four years. Assume that the tax rate is 25%. You can borrow at 10.09% before taxes. What would be the maximum payment that a leasee is willing to pay?
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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 $6,900,000, Because of radiation contamination, it will actually be completely valueless in four years. You can lease it for $2,030,000 per year for four years. Assume that the tax rate is 21 percent. You can borrow at 8 percent before taxes. Assume that the scanner will be depreciated as three-year property under the MACRS depreciation. What is the NAL of the lease? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) NAL $ -137,396.80
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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 $4.3 million and would be depreciated straight-line to zero over four years. Because of radiation contamination, it will actually be completely valueless in four years. Assume that the tax rate is 21 percent. You can borrow at 8 percent before taxes. What would the lease payment have to be for both the lessor and the lessee to be indifferent about the lease? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) Break-even lease payment
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 $6,100,000 and would be depreciated straight-line to zero over six years. Because of radiation contamination, it will actually be completely valueless in six years. You can lease it for $1,260,000 per year for six years. Assume the tax rate is 22 percent. The borrowing rate is 7 percent before taxes. Your company does not expect to pay taxes for the next several years, but the leasing company will pay taxes. Over what range of lease payments will the lease be profitable for both parties? (Enter your answers from lowest to highest. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Total payment range to

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