What are the cash flows from the lease

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Problem - 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 $6.70 million and it qualifies for a 30% CCA rate. Because of radiation contamination, it is valueless in four years. You can lease it for $1.935 million per year for four years. Assume that the assets pool remains open and payments are made at the end of the year. Assume a 37% tax bracket. You can borrow at 8% pre-tax. What are the cash flows from the lease from the lessor's point of view?

Reference no: EM132767932

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