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Question: You work for a nuclear research laboratory


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 $4.3 million, and it would be depreciated straight-line to zero over four years. Because of radiation contamination, it actually will be completely valueless in four years. You can lease it for $1.275 million per year for four years.
Assume that your company does not anticipate paying taxes for the next several years. What are the cash flows from leasing in this case?


2.99

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