A Scanner That Costs $2

A scanner that costs $2.8 million would be depreciated straight-line to zero over four years and then be worthless. Assume that both a lessor and a lessee have tax rates of 21 percent and borrow at a pretax rate of 7.5 percent. However, the lessee has operating losses and will not pay any taxes for at least the next five years. What range of lease payments will allow a lease on this scanner to be profitable for both parties?

A) $814,026 to $815,123
B) $804,026 to $805,481
C) $835,024 to $835,989
D) $845,123 to $846,417
E) $825,123 to $826,825