Contemplating leasing a diagnostic scanner

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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 $8,050,000, and it would be depreciated straight-line to zero over five years. Because of radiation contamination, it will actually be completely valueless in five years. You can lease it for $2,350,000 per year for five years. Assume that the tax rate is 35 percent. You can borrow at 15 percent before taxes.

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Reference no: EM131353054

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