Question
In: Finance
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is...
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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 $5,600,000, 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. The tax rate is 21 percent and you can borrow at 7 percent before taxes. |
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What would the lease payment have to be for both lessor and lessee to be indifferent about the lease? |
Solutions
Expert Solution
| Lease amount | 1,720,604.37 |
| Year | Initial cost | Tax shield | Net Cash flow |
| 0 | -5600000 | -5600000 | |
| 1 | 294000 | 294000 | |
| 2 | 294000 | 294000 | |
| 3 | 294000 | 294000 | |
| 4 | 294000 | 294000 | |
| NPV | -4604159.89 | ||
| Lease payment after tax | $1,359,277.45 | ||
| Lease amount | 1720604.371 |
Workings
jeff jeffy answered 4 months agoRelated Solutions
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is...
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Because of radiation contamination, it actually will be completely
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You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is...
You work for a nuclear research laboratory that is contemplating
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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 €1,430,000 per year
for four years. You can borrow at 8 percent before taxes. Assume
that the tax rate is 21 percent.
Instructions:...
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is...
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 €4,800,000,
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 €1,430,000 per year
for four years. You can borrow at 8 percent before taxes. Assume
that the tax rate is 21 percent.
Instructions:...
You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is...
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You work for a nuclear research laboratory that is contemplating leasing a diagnostic scanner (leasing is...
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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 24 percent.
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You work for a nuclear research laboratory that is contemplating
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Because of radiation contamination, it actually will be completely
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and it would be depreciated straight-line to zero over five years.
Because of radiation contamination, it actually will be completely
valueless in five years. The tax rate is 23 percent and you can
borrow at 8 percent before taxes. What would the lease payment have
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with expensive, high-tech equipment). The scanner costs $5,800,000,
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Because of radiation contamination, it actually will be completely
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Because of radiation contamination, it will actually be completely
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Suppose the entire $7,280,000 purchase price of the scanner is...
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