Tax-exempt Community Health Center is considering opening a new branch office to reduce travel costs incurred by patients and staff. Because the center depends on community support and donations and has no budget excess, it must make wise investment decisions. A financial executive who volunteers at the center made the following estimates of cash flow savings related to the new center over the next five years.

End of Year Cash Flow Savings

$10,000 Ceo(

12,000 Cot 3 14,000 Co?

4 16,000 CoY 5 18,000 CoS Required

a. What is the most the center should commit for a five-year lease on a building, fixtures, and other start-up p costs if the apppprrooppr iate discount rate is 8 P percent? S967a

b. What is the most the center should commit for a five-year lease on a building, fixtures, and other start-up costs if the appropriate discount rate is 4 percent?