Contemplating leasing diagnostic scanner

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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 $6,500,000, 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.

Assume that the tax rate is 35 percent. You can borrow at 10 percent before taxes. What would the lease payment have to be for both lessor and lessee to be indifferent about the lease?

Reference no: EM131047687

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